Budgets…Use em’!

Budgets are for more than just organized moms, or penny pinching students…well they really do help penny pinching students if you’re asking one.

We were asked to make a list of wants and needs that’s we spend in a year. It was in this moment that I realized I spent my small paycheck on more wants than I do on my actual needs. Now perhaps this is because I am seventeen, still in high school, and I live under my parents protective wing, so there is not much I need to pay for in terms of necessities. As well, the things I considered needs, aren’t necessarily needs for other people.

I consider my car a need because I live far enough away from my school that I no longer receive a school bus, there is no public transportation, my family has too busy of a schedule to be toting me around, and I have too many places to be to be taking a cab every time. Thank goodness that I only have one other need.

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Next we had to figure out an example of how to use the equation to find out how much we make in a year, after tax deductions, and then figure out how much we spend on our wants and how much we could be saving if we cut back on them.

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I especially realized just how much money I could be saving, should I create an appropriate and reasonable budget for my lifestyle. As we enter into the university world, there will be so many new changes. I am not staying in residence so I will still have my part time job, but no where near the same about of hours. Cutting back to two shifts a week will bring my paycheck down by about half, which is where I need to get my priorities straight. Considering I will be adding 10 minutes to my commute one way, I will be spending more on gas. This is where spending more than you can afford to really comes into play. My car will still be a need for me, so I need to reinforce my budget, and cut back in other areas.

Maybe I’ll quit the gym, and use the one at my future school, or eat out less and instead start cooking more home cooked meals. The point I’m trying to make here, is that having a budget is like having a financial plan. When it comes to the big purchases (house, car, travelling), your budget should be well thought out and also realistic…let’s not forget followed through with.

I anticipate myself using one throughout my young adulthood and even into my future as a way to prepare myself for the bills that will be rolling through, and to not be shocked at my spending.

Health and Dental Plans

“How bad can my teeth really get in a year?” A thought that crosses your mind when you can’t find an affordable dental plan. 

When it comes to health and dental plans, people often wonder about what will suit them best and what’s the most affordable. This is exactly the tip I can give after learning about them in this class. It’s important to do your research on the plans that different companies offer. Here’s an example of a chart that shows costs of different companies, as well as universities that offer health and dental plans: 

An important thing when preparing for university life and young adulthood is to research the health plans that your future school will offer you. I researched two of my potential schools, and found out that they each had different costs that can benefit me in different ways. Which one to choose became the question. I assume the best idea is to pick the one that suit your needs best. For example, I wear glasses, go for regular eye exams, and also take prescription medication. So I would say that McMaster University offers me a better plan. 

Now, when I’m out of school, I think one of the Sunlife plans would be a good fit. They are affordable and reliable, and suit my needs. 

Overall, as young adults I feel that we often overlook things like our healthcare plans and coverage, and assume when we need something it will just come our way, but you need to prepare for it. Emergencies happen, accidents happen, and everyone needs to be ready for them. 

Debit vs Credit

It’s the great debate. Do I stick with debit, safe and reliable? Or do I venture into the life of a credit card, credit scores, and credit ratings?

Credit cards were perhaps one of the things I understood the least when entering this class. I didn’t know what it meant to own one, how to get out of debt or how to stay out of it, and what the heck is a credit score? I imagine I’m not the only seventeen year old who feels this way, the problem is that next year I will be entering adulthood, and with that comes credit.

I believe the most important tip that you could have about credit cards, is to not spend more than you can afford to pay off. This is a key component in not falling into the vicious cycle of debt. There are several ways that I have learned to avoid this, such as setting a low limit on how much you can spend, or making sure that you can pay the balance in full each month. Another tip is to read the fine print, and know how much interest the company will charge you if you can’t pay it all off, because we all know emergencies happen. Another tip I found interesting to use is to keep a record of all you purchases. This is much easier to do now-a-days with online banking, but even writing down every time you spend something, where, when, and how much you’ve spent can be a more permanent record. This is a safe bet in case fraudulent activity happens on your card.

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Now, on to the more confusing side of things, credit scores. A bad credit score will follow you for a while until you can show (over time) that you won’t fall into the same bad habits. A bad credit score could affect even your ability to own a home, if the bank can’t trust you to not fall into debt, then they will be hesitant to approve you for a down payment or mortgage.

Some tips to avoid a bad credit score are:

• Pay your bills on time and in full

• Don’t get too close to credit card limits

• Don’t own too many credit cards (chances are you won’t keep up with them)

• And don’t apply for too much credit too quickly

I feel like the best thing to earn a good credit score – which will be beneficial to you in the future – is to treat your credit card like a debit card, and only spend what you have in your account at that moment, so you know that you can afford to pay it off at the end of the month and still have some money left over.

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So what’s the difference between credit and debit cards, and why do people use both? Well, credit cards are needed for certain things where you can’t use a debit card, such as financing a home or car, purchasing airplane food and travelling, shopping online (in some cases), staying in a hotel, and just for emergencies. Your debit card is basically the cash that you have currently, the stuff you can spend until it runs out and nothing further. The credit card is the “necessary evil” for most people, they need it but it could drive them into a hole if not used carefully. So do you really need a credit card? I would say yes, you should have one when you’re a young adult and into the future, but that doesn’t mean it needs to be a burden.

Next time you’re at the bank, and you see all the posters and memos for credit cards, and credit scores, and the families who look oh so happy to be buying a new home, think about what you would do with your credit card and whether or not it’s right for you to have one…or two.

Costs of University

You’ve heard it since you were young, “you’re going places kid!” Well what if those places are just right into debt?

The thing they don’t tell you, just how difficult it can be to get to “those places.” A goal that is shared among most people, is to attend post secondary school, particularly university. Just how easy is it to get in, and how do you pay for it when you are in? A couple simple questions really, you must be prepared.

When researching the cost of going to university for just one year, I was shocked. I’m not even planning to stay on residence, which means no housing fees, and no meal plans. As the costs of transportation, parking, tuition, book and supplies, and my own entertainment began to rise, my spirits began to fall. Now of course I’ve always known how much post secondary school would cost, but I don’t believe it is ever quite as shocking as when you calculate it out yourself, and when my top choice school totaled a whopping $52, 242.96 for four years, I found myself gasping. I know for sure that $52,000 is more money than I’ve made in my lifetime, so how do they expect me to pay for it now? Between working and saving the money for school, and doing homework to keep my marks up to stay in the school, I find myself stretched thin, running through a vicious cycle of work, save, spend.

The best advice I can give to other young adults my age, about to embark on the first big financial journey of their adult lives, prepare yourselves! It is so important to make a plan, such as calculating how much each of your expenses will be and organizing it into a chart, such as this one:

 

Lucky for me my top choice also happens to be my cheapest choice.