If the cost of tuition wasn’t enough, inflation means attending college or university in 2023 is even pricier than expected. What’s a first year to do? This story is part of a crash course in personal finance for students and parents. Read the full guide.
Living at home may not be the most exciting way to go to college, but as the cost of living and rent skyrocket across Canada, there certainly are many financial advantages to staying with your parents.
You can save thousands of dollars a year on rent, food and other expenses by not leaving town for postsecondary education. At the same time, taking on more responsibilities in the family home can offer experiences that will be valuable when you decide to move out.
Below are some tips on how to make the best use of the money you’ve saved by living at home, provided by Kingsley Chak, Scotiabank’s senior vice-president of deposits, savings and investments, along with suggestions from student staff and alumni from the financial assistance office at Toronto Metropolitan University.
Set an amount of money to set aside as ‘rent’ into your savings
If you’re living with parents and have a job, the TMU financial assistance team recommends saving a portion of your earnings that would otherwise have been spent on rent at university. The money saved can be used toward building an emergency fund, or to start investing for medium- or long-term goals such as a car purchase or home ownership.
If you’re accumulating savings, earmark the money for specific goals and expenses
Mr. Chak says an emergency fund is one of the most important things to build for yourself. At the very least, he says a fund of $1,000 could help cover the cost of a broken phone or laptop.
But you can also have separate accounts for shorter-terms goals such as travelling abroad, or for big purchases.
Having separate accounts for these savings will ensure that your trip to Europe doesn’t affect your ability to stay afloat if you actually do need to access your emergency fund.
Try to contribute to household groceries
Besides helping your parents with home expenses, Mr. Chak says getting involved in grocery shopping is another way to get accustomed to the expenses of life once you move out.
It can also help you strategize how to save money on food, as you’ll learn the difference between grocers, the importance of making a list and sticking to it and how to build a meal around items on sale.
“Eventually you’re going to have out pay for those expenses, so having a context of how much things cost is good,” Mr. Chak said.
If commuting by car is unavoidable, try to minimize your costs
Depending on where you live, the decision on whether to commute by car will often come down to a trade-off in time, expenses and convenience – if you’re able to afford it at all.
If you do need to drive, consider driving only to a major transit hub to take public transit. The shorter commute could lead to insurance savings.
It’s also a good idea to try and get covered under your parents’ auto insurance plan. This is a great way to save money while building an insurance history to have cheaper payments in the future.
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