Life After Graduation

Jacky Lin in convocation gown

You've crossed the stage and now it's time to move into the next chapter of your life. If you're graduating university with student debt, know that you are not alone. As the big paycheques finally start to roll in, so will the expenses you may not be used to having. Don't worry - you can manage everything with balance. Take advantage of some tips and tricks to tackle your student debt and maintain good credit.

Before making any financial decision, please consult a financial advisor to ensure it is recommended for your individual circumstance.

  • Tackling student debt

    Managing debt is a difficult task for many students, but staying on top of your expenses can help reduce the stress. For some of you, this may be the first time you've have to balance your debt and daily expenses. It's never too early to start thinking about building a healthy financial future, so here are a few tips on how to stay on top of your student debt:

    1. Utilize your grace period: Depending on the loan, you may have a grace period after you graduate before you have to start making payments. Use this time to understand your loan and make a game plan on how you will pay it off. If possible, put money away as if you are already making payments to get yourself used to this change.
    2. Live consciously: Although you will likely want to start splurging now that you aren't living the money-tight life of a student, continuing this cost-saving lifestyle for a few years can help you pay off your loans as fast as possible. Keep your costs low by living with a roommate or sticking to the necessities.
    3. Make a budget: Once you graduate you may have a number of new expenses that you aren't used to. It'll be important to keep track of your spending in a budget to make sure you can put additional money towards your debt.
    4. Increase your income: If you find yourself a little strapped for cash, try a new way of earning more money. Maybe you can use one of your interests to start a side business, such as offering photography or tutoring services.
    5. Start saving: After you have your student loans paid off, you can focus on allocating some of your paycheque to a savings account. It may seem early to contribute to an RRSP or a TFSA, but the sooner you start saving regularly the more likely you will be a great saver in the future. Plus, saving while you are living a lifestyle with less major expenses is an easier place to start.
  • Building a strong credit score

    Many students use credit, such as a credit card or a student loan, but not all of them use it wisely. Building a strong credit score early is essential to your future financial success. Having a strong credit score represents your ability to manage your money wisely, and this can impact you in a number of situations, such as qualifying for a lower interest rate on loans, which can make purchasing that new vehicle a bit easier.

    The best thing you can do is to keep your credit score as high as possible, and there are a number of ways you can do that:

    1. Pay on time: Paying your bills by the deadline has the greatest effect on your credit score, so be sure to pay yours on time - even if they are small! No matter what, always make the minimum payment on your debts!
    2. Slow and steady: Try not to borrow more money than you can afford to pay back. If you take on too much debt at once, it can be difficult to recover.
    3. Manage your limit: It's recommended that you aim to use less than 35 per cent of your available credit limit. The closer you are to your limit, the greater risk you face of not being able to pay it back on time. While is it best to pay your balances in full, even making the minimum payment is better than none at all.
    4. Length of credit history: It's a good idea to start building credit early because the longer your history, the more accurate your credit score will be. Starting to build your credit now will help you when wanting to borrow for larger items in the future.
    5. Minimize credit applications: Just like it can be a bad sign to an employer if you got a new job every month, applying for additional or new credit too frequently can reflect negatively to lenders. It may leave the impression that you are struggling financially. Try to reduce the number of times you apply for credit over a relatively short period of time.