Focused. You wouldn’t think a room full of 66 Grade 12 students on the brink of graduation could be that focused, but they were. Everyone’s eyes were locked on Jeff Baulch, the Money Apps presenter, as he served the students their first financial reality check: postsecondary education is expensive – around $25,000 dollars expensive. Although almost all of the students said they were planning to attend post-secondary, less than 42% currently had a part-time job to help pay for it. Almost none of them had ever made a budget, and, when asked if they were worried about going into debt, no one seemed too concerned.

At the end of the presentation, when I was packing up to leave, I overheard two girls talking. The conversation went something like this:

Girl 1: “Wow, I need to get a job. I don’t know how I’m going to afford living on my own next year.”

Girl 2: “I know, me too… my parents expect me to cover tuition and I barely have any money. I thought I could just work this summer and make enough, but after this presentation I’m starting to realize I need a really tight budget…”

I so badly wanted to chime in and say, “Yes, you’re right, you need to start saving and budgeting right now. University is expensive, and the last thing you want to do is miss events and activities – especially during your first year – because you don’t have enough money.”

When I was 18 and about to graduate, the last thing on my mind was money. I was very focused on spending time with my friends and keeping my grades up while also balancing a part-time job; making sure I had enough funds to pay for everything was the least of my concerns. Here are 5 money lessons that every University student should know:

1.Make a list of your needs, wants and priorities When I was in high school I had a job that paid me $10 an hour — a lot considering back then minimum wage was around $7. Since I was still getting an allowance and my only expense was entertainment, I’d go shopping all the time. Although I never spent my entire paycheque, I was a huge impulse shopper and without thinking would often drop $100 in one trip. Five years later and the bottom of my closet has become home to a huge pile of barely worn clothes I don’t know what to do with. Had I taken the time to truly ask myself if I really needed those clothes, let alone ask if I really saw myself wearing them, I’d probably be a lot richer.

2.Put more money in your high-interest savings account One of my close guy friends convinced me to open a high-interest savings account with one of the online banks when I was in Grade 11 because we’d each get $13. Delighted at the thought of getting free money, I signed up but rarely used it. It wasn’t until the summer going into university that I finally started putting 60% of my paycheque in. I’m going on seven and a half years of owning the account and have made almost $900 in interest – a big amount considering I’ve been in school full time and also divide my finances among five other bank accounts and a couple of mutual funds. Imagine how much more interest I would’ve earned if I’d deposited my wages in eleventh and twelfth grade into the account, instead of letting it sit in my chequing account, where it gained little interest and was easily accessible for spending.

3.Learn to create a budget you’ll actually stick to During university, my parents gave me $500 a month – except for during the summer – for food, gas, toiletries, utilities, personal spending – whatever. You’d think that that much money would be more than enough to support myself and I’d have some left over to sock away. In the five years I was away at school, the most I ever had left over was about $150 – and this only happened a few times. Day-to-day expenses were depleting my bank account but, because I wasn’t keeping track of my expenses, let alone following a budget, I had no idea where my money was going. If I’d taken the time to monitor my spending patterns, I would’ve had a better idea where I could cut costs.

4.Take the time to educate yourself about credit cards – you’ll regret it if you don’t I’m going on my sixth year of having a credit card, and I can honestly say that flimsy piece of plastic has taught me some invaluable lessons. For starters, the importance of paying your bills on time; after once paying $30 in interest fees, I’ve never again paid a bill late. More importantly, though, it’s shown me the dangers of debt. Fortunately, I’ve never experienced it, but I’ve seen first-hand what a costly mistake it can be. Having a poor credit rating negatively impacts your finances for life –trying to rent an apartment, getting a mortgage or even applying for a loan becomes next to impossible.

5.Protect your financial identity Although my parents have had their credit cards compromised a couple of times, it wasn’t until a few years ago, when I began hearing a number of horror stories, that I took measures to proactively safeguard my finances. I scan my online bank statements multiple times a week for suspicious behaviour, I always cover the key pad when I enter my pin number at the cash, I don’t keep my Social Insurance Number card in my wallet in case of theft and I make sure I always sign out of all personal accounts when I’m on a public computer.

At the same time, though, if someone had taken the time to teach me all these things, there’s no guarantee I would’ve listened or taken it seriously enough. Regardless, I’m grateful that at least now I’m smarter about money.

Are you jeopardizing your retirement?

While retirement may not seem like a priority today, the longer you delay planning – the longer you delay retirement.

Mistakes you can avoid:

1. Random RRSP contributions

Are you contributing the maximum of your RRSPs? This is not a tax efficient plan for everyone’s situation. Are you contributing in lump sums days before the RRSP deadline? Frequent or monthly payments let you dollar cost average your contributions which in turn gets your RRSPs to grow more quickly. Are your RRSPs in several different financial Institutions? You need an investment strategy to make sure that your RRSPs are well diversified which decreases your risk in the long run.

2. Not having a plan.

Do you know how much you need to save for retirement? The younger you are, the less you have to contribute. You need to know how your work retirement plan (if you have one) will impact your individual retirement plans. Do you know how much you need for retirement? People are retired for 20 to 30 years now, so it is very important to calculate the impact of inflation and lifestyle during your retirement. Have you started? Even starting small now can dramatically improve your retirement income.

3. Sacrificing your retirement to pay for the kid’s education

Have you asked your children to apply for the Canada Student loan? Some of the loan may not have to be paid back as bursaries are often given out to students. Also – the money is interest free until 6 months after graduation. Have you cashed in RRSPs to pay tuition? If so – then you better get an agreement in writing that you can live with your children in your old age!

4. Not being prepared for emergencies

Do you have the right amount of insurance if you become sick, disabled or if your spouse dies? Retirement dreams can be slashed when an unexpected health issue comes up. Review your work and personal plans on annual basis and buy individual plans if the work plan is not enough coverage. Do you have an emergency fund? A savings account is the solid base of your financial plan. An emergency account can save you from cashing in RRSPs and jeopardizing your retirement.

So often as a relationship progresses to the next step, marriage or co-habitation, we get caught up in the romantic, feel –good part of it and forget the practical side of things… the finances.

Often a topic that couples avoid discussing in depth, it is necessary to get everything out in the open to avoid tough conversations, fights and disillusion down the road. This article defines seven financial conversations couples should have before they take that next step.

Couples and money: seven financial conversations every couple should have

Communication is key when you’re thinking about how you will manage your money as a couple. Here is a list of seven things that are essential to get out in the open before you take the next step:

1.Your assets and liabilities—Disclosing all of your assets (e.g. savings, property, investments), along with all of your liabilities (e.g. credit card debt, mortgages, car loans, student loans) will help you plan your financial future as a couple. It is difficult to make wise choices together without all of the information on the table. Get started with our helpful Assets and Liabilities Worksheet for Couples.

2.Your credit history—Your individual financial histories will affect your ability to get credit jointly and the financial products that are available to you. It’s important that both of you check your credit reports and discuss any financial problems you’ve had in the past.

3.Your priorities—Are you saving for a down payment on a house? Do you have debt you’d like to pay down? Or maybe you’d like to save for a vacation next year? Sit down and define your financial goals together to ensure you’re both working to achieve the same things.

4.Your financial personality—Are you the type of person who finds it easy to make a budget and stick to it? Or maybe you have a tendency to spend your money whenever you see something you like. Do you have investments? How much risk can you tolerate when you’re investing? Discuss how you each approach your finances so that each partner understands the other’s attitude toward money.

5.Your financial roles—Dealing with financial matters takes work, and it’s important to discuss who is going to do things like pay monthly bills and monitor spending habits. Try to divide tasks equally so that both partners understand and feel involved in managing your finances.

6.Your monthly cash flow—How much money do you each bring home every month after taxes? What monthly obligations (e.g. cell phone bill, debt repayment, rent) do you already have? Knowing this will help you budget as a couple and plan your financial future together.   

7.Your current financial arrangements—How are your finances currently organized? Maybe you have a chequing account, a credit card, and a savings account, all at different institutions. As you discuss your financial arrangements, think about how much you’re currently paying in service fees and which institutions offer products that best suit your new needs as a couple. Look at some examples of how couples arrange their finances, and think about what will work best for you.

Cancer survivor reveals why “it is worthwhile to have insurance”

Karen Timchuk is a critical illness insurance policyholder who, when faced with a critical illness, was able to keep her retirement plans on track. This is her story.

In late 2009, only a few years after purchasing her policy, Karen suffered sudden back and abdominal pain which, when investigated, revealed both non-Hodgkin’s lymphoma and colon cancer. “Needless to say, December was dark and gloomy for me,” Karen says. “The fact I was going to get $100,000 was the only good news I got that month.” Karen used the funds to cover the cost of chemotherapy-related drugs not covered by her health plan, take a holiday with her spouse in between chemotherapy treatments and keep up her pension plan contributions. “I was on long-term disability from my job and had to pay over $10,000 into my pension for the 11 months I was off,” she explains. “My plan is to retire in 2014. If I couldn’t afford the pension contribution, I wouldn’t be able to retire on schedule.” Karen also had some concerns knowing non-Hodgkin’s lymphoma can recur. But the benefit amount she purchased allowed her to set aside some funds as a security blanket in case of a relapse. Karen says she is thankful she made the decision to go with the insurance. As her parents both had a history of cancer, her policy was rated. “The premium was around $50 a month more with the rating,” says Karen. At that time, I was in my early forties and felt invincible,” she says. “But even with the rating, I still felt it was a good deal for me. I’m a believer and tell everyone it is worthwhile to have insurance.”

It’s important to remind ourselves that serious health problems can strike any of us at any time. Unforeseen events can derail your carefully thought-out retirement plans and have a devastating impact on your family finances. Imagine having to dip into your registered retirement savings plan (RRSP) savings or cease contributions to make mortgage payments and pay for drugs. Situations like these not only expose you to greater taxes, but can also short-change your retirement nest egg. Planning for the future involves more than just saving money; it involves planning for the unexpected.