Students have tough time budgeting

More than one-third (38%) of undergraduate students wish they had stuck to a budget during school, and 43% wish they’d curbed spending on discretionary items like nights out with friends, gadgets and coffee, finds research from TD Canada Trust.

“University is full of tempting opportunities to spend money, which is why it is so important for students to create a budget and learn when and how to say ‘no’ to things they cannot afford,” says Raymond Chun, a senior vice president at TD Canada Trust.

Read: Back to school spending climbs 4%

He adds, “With the average cost of an undergraduate degree currently estimated at $84,000, it is imperative that students do their homework on how to manage everyday finances, stretch their student dollars and avoid excessive debt.”

Here’s how to avoid three freshmen fiscal missteps.

1. Earning a failing mark on a credit rating It can be challenging to juggle studies, extracurricular activities and social engagements with keeping track of financial obligations, like paying bills on time. A missed payment could have a negative impact on a credit rating, impacting the ability to borrow money to buy a car or a home in the future.

Read: Labour market conditions weaken for young Canadians

“Always pay bills on time and in full and consider setting up automatic bill payments online for regular expenses,” says Chun. “Even if a cell phone provider gives you an extension on a bill, your credit rating may still show that it was paid late.”

2. Treating a credit card like a debit card Nearly one-third of students (31%) wish they had used their credit card more responsibly at school. Chun warns students should only use credit cards if they are sure they can pay off the balance in full when the monthly statement arrives.

And although tempting, making a cash advance from your credit card account is not a good idea since it incurs interest from the moment the transaction is complete.

Read: Boomers risk straining finances to support adult children

3. Spending without a plan

To get a clear picture of how flexible the budget is, tell students to list the money coming in from scholarships, work, family and student loans. Then, subtract essential expenses like tuition fees, books and living expenses. If the balance is negative, rethink unessential expenses or look for alternative funding options for school.

“Take advantage of past online statements to assess current spending habits,” says Chun “That history can help identify potential saving opportunities and build a realistic budget you can stick to.”