Creating a financial plan and adhering to it can significantly reduce financial stress.
While numerous graduate students meticulously plan their academic growth, financial planning often remains unfamiliar territory. Nevertheless, financial education and management are crucial for students’ well-being, standard of living, and academic success. To shed light on this vital subject, I interviewed Sarah, a seasoned financial consultant at Investors Group Wealth Management, to glean insights and practical advice for graduate students. In this feature, I present her top strategies for managing budgets, debts, and their practical implementation.
The Foundation of Budgeting
Most students are at the early stages of handling their finances independently, though they have not achieved complete financial independence. Recognizing your expenses and income is the initial step towards effective financial management. A budget, though simple, serves as a timeless tool for this purpose. According to Sarah, “The most fundamental aspect is having a budget.” It provides a snapshot of your financial standing, indicating whether your current resources meet your needs or if adjustments in spending or income are necessary.
Sarah dispels the misconception that budgeting is restrictive, emphasizing that it is a lifelong discipline rather than a mere constraint. She views it as a boundary that liberates you from other worries, enabling you to pursue financial goals and attain peace of mind.
Respecting Debt
While some students can cover their tuition and living costs through various means like parental support, work, savings, or grants, many resort to loans and debt. Sarah cautions against viewing borrowed funds as free money, stressing the importance of treating debt with reverence. She advises students to handle debt judiciously, recognizing that while it may be essential, it should be utilized sparingly. Managing debt responsibly is an investment in future earning potential.
A Financial Experiment
Sarah challenges students not only to understand financial principles but also to put them into practice. She suggests meticulously tracking expenses for a month, retaining every receipt to gain a concrete awareness of spending habits. By assigning each expenditure a category (fixed costs or discretionary spending), students can grasp their financial situation more accurately. This exercise often reveals surprising insights, such as the realization that dining out expenses far exceed grocery bills.
Accumulating wealth hinges on cultivating good financial habits that compound over time. Initiating this process with a basic practice like budgeting can yield significant benefits, akin to a form of self-care or, in Sarah’s words, “a gift to yourself.”
Parting Advice
Sarah highlights the importance of confronting financial challenges rather than avoiding them. She emphasizes that managing finances blindly can lead to uncertainty and anxiety about the future. By reframing financial planning as a transformative opportunity rather than a daunting task, individuals can pave the way for financial freedom.
Financial Planning Resources
To kickstart your financial journey, here are some recommended resources:
Chelsea Chen is currently pursuing a Master’s degree in counselling psychology at the University of Ottawa.