To spend or not to spend? Student finances don’t need to be a tragedy

By in Features/Opinions

Ask people to describe a university student, and you’ll get a host of different answers. Nine times out of 10, the descriptions will have one word in common: broke. There is a pervasive belief that undergraduate students start poor, exist poor and then graduate poor. Is it really the case, though, that you can’t end your degree with a cushion in your savings account?

Saving money is hard. Keeping track of the big picture while being immersed in everyday moments takes practice, and the student lifestyle offers plenty of temptation to stray. The rallying cry of teenagers in the early part of the 2010s was YOLO, which stands for “you only live once” but which Urban Dictionary more bitingly defines as “The dumbass’s excuse for something stupid they did.” Those teenagers are today’s university students — and the attitude hasn’t fully faded.

Think about a classic student Saturday night out: you begin with good intentions, only withdrawing a bit of cash from your bank’s ATM — no surcharge, good call — and decide to stick to spending only that amount. You have a drink or two at home with some friends and take advantage of your student bus pass to make the trek downtown. So far, so good.

It’s hard, though, once you get to the club and feel the music and excitement, not to want to overindulge. Before you know it, you’re slugging back $10 beers like tap water, taking out multiple $20s from the ATM at $3.50 per transaction and deciding your whole group deserves tequila shots. After all, your alcohol-fueled brain knows the night is special. These people are special. You are never going to be 21 again, and the Internet bill can wait until next month.

If that sounds familiar, you’re not alone. This devil-may-care attitude is one many students choose to adopt, and it applies to every aspect of student life, not just bar hopping. It is a choice, though, and it has consequences.

It’s certainly true that university is expensive. The University of Saskatchewan’s standard tuition rate will be roughly $200 per undergraduate credit unit in arts or science for the 2016-17 academic year, depending on the category of the course.

This means if you take a full class load each term, you’re looking at nearly $7,000 in tuition, student fees included. Then add your books which, depending on the class, can really add up — I had a geology textbook last year that cost $120.

On top of school fees, students have to deal with living expenses. Not everyone has the option to live at home, and once you pile rent, utilities, Internet and food costs on a student’s plate, the situation starts to get stressful.

Faced with fees of this magnitude and an academic workload that restricts part-time job hours, many students choose the route of student loans to bridge the gap. Some are lucky enough to have parental or scholarship support as well, which further eases the burden. Whatever the case, student loans have managed to become a part of university Cover - Jeremy Britzstudent culture.

There are two common, if exaggerated, perceptions of university students and how they manage finance. One is the late on rent, phone service disconnected, I-spent-my-loan-on-beer student who flies by the seat of their pants every day and chooses to embrace being broke.

The other is the penny-counting miser who orders water on a night out with friends and keeps one eye on the time so as not to miss the last bus. Both are caricatures and neither is particularly flattering, but there are elements of truth to both that students can choose between.

The Sheaf collected results from 426 respondents in an online poll during March 2016 asking how much money students expected to have in their savings accounts upon completion of their degree. The split reflected the above two extremes, with 45 per cent indicating $0-$500 and 28 per cent saying $5,000 or more.

What’s the difference between the two paths of extreme excess and extreme frugality — and why do students find themselves attracted to either end of the spectrum instead of finding middle ground?

Let’s say you choose the first path. You come out of university well-educated and with a host of experiences under your belt. Maybe you skipped the summer job scene to travel in Thailand and discovered your inner peace, finding that the local culture is “just so moving and honest.”

Or possibly you have a closet full of nice clothes, or a weird collection of coasters from bars you’ve visited or a signed t-shirt of your favourite band from when you splurged on VIP tickets. The point is, you’re broke, but you spent your money on things that made you happy — the appeal is obvious.

Here’s the potential problem. Life is unpredictable, and when your savings account balance is in the red, you’re begging for trouble. Broken phones, flat tires and higher-than-expected heating bills are just a couple of sucker punches that hurt a lot more when you don’t have a safety net.

Plus, even without unexpected expenses, it’s tough to live independently when you can’t afford security deposits or down payments. It’s all fun and games until someone gets evicted.

The bottom line is that you may be paying the price for your laissez-faire student existence for years afterward, digging yourself out of the hole of debt, bad credit or poor saving habits. It’s an especially daunting task for students pursuing undergraduate studies in areas with few employment options.

If you’re getting an arts degree, especially, odds are good that you’ll need to pursue more schooling in the form of graduate studies before steady job opportunities in your field open up. Where is that tuition money going to come from?

On the other hand, taking the path of frugality may leave your pockets lined, but it’s difficult. You watch all your friends jet off on old-world backpacking journeys in the summer while you stay home to bag groceries and find yourself living vicariously through their Facebook photos. You wish pennies still existed so you could count them at the end of every month.

You wear the same clothes you owned in high school, pore over coupon fliers from your grocer and obsessively track local gas prices for the perfect time to fill up — but you better believe your rent is never late.

Then, when you graduate, you have options. You have savings and if you have debts, you can start working on a plan to repay them. In Canada, those with student loans are not required to begin repaying them until six months after they leave school, but interest does accrue over this time. If you have a loan and some savings in the bank, you can use that to start making payments immediately and save money in the long run.

Government of Canada student loans don’t have high rates of interest, at least not compared to many credit cards which charge double-digit percentages, but the standard three per cent fixed rate of student loans adds up over time.

If you pay back your loan over years instead of tackling lump sums when you have the savings to do so, you’re potentially paying hundreds to thousands of dollars in interest, depending on the size of your initial loan.

Savings also mean you can start using your money to build your life, post-university. Whether that means immediately diving back into graduate school or another degree, using the cushion to coast for a while as you pursue a dream — the next great Canadian novel, perhaps — or talking to your bank about ways to grow those savings into a down payment, you have options.

Both of these paths have their merits. University is often the place where you meet friends that will last a lifetime, and you won’t do much bonding staying at home every night. At the same time, smart financial choices during your undergraduate years will lay groundwork for your future.

It’s also helpful to keep in mind where your money came from — did the Government of Canada really give you your loan allotment to purchase Roughriders season tickets or a weekend flight to Vegas?

It all comes down to a choice between experiences and acquisition now, versus later. I know personally there are some things I don’t hesitate to splurge on — you’d have to pry my credit card from my cold, dead hands to stop me from buying Brad Paisley tickets — but the closer I get to true adulthood, the more I think before spending impulsively. There’s something to be said for a future in which I’m ready for what life throws at me, and ready to spend my money on things that further my life goals.

However you acquired your money — loans, family, work or a mix — remember to respect its source the next time you’re contemplating an iffy purchase. Ultimately though, your money is your own, and you can do with it as you choose. Just be prepared to stand behind your choice and its ripple effects in the years to come.

Image: Jeremy Britz/ Graphics Editor