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Road to money management: heading off to school and striking out on your own

In our five-part series, Road to money management, we share stories about Canadians to help you make the most of your financial situation at key stages of your life.

Yann* is moving out of the family home for the first time, leaving his small Ontario town and embarking on the next life stage of post-secondary education in Toronto. The 18-year-old’s tuition is being paid by his parents, André and Chantal, but the family has decided that his books and living expenses should be his responsibility.

Throughout high school, Yann has worked part-time and has tried to stick to saving at least 20% of his earnings to pay for his university years away from home. He plans to continue working part-time while in school, and he already has some job interviews lined up.

It’s important to Yann to prove to his parents that he can be good at fiscal management and budgeting, and he is keen to have as no debt upon graduation. At the same time, since he’s just starting out, he wants to establish a good credit rating. These are his main financial priorities.

It’s two months before school starts, and Yann has sat down with his parents for a long discussion about what expenses he needs to plan for, what his monthly budget should be and, most importantly, how much he can afford on an apartment, as he would prefer to live off-campus instead of a noisy dorm. He and his parents plan soon to go apartment hunting in Toronto, and he’ll need to know how much rent he can afford and whether he will need a roommate to share the bills.

Talking about money is something Yann’s parents have been regularly doing since Yann started high school and started to earn some money. Every month they have a family sit-down at the kitchen table in which they discuss finances. André and Chantal both know that financial literacy starts at home and they regularly talk to Yann about the importance of budgeting, saving, and managing debt.

Luckily, Yann’s parents will be able to pay the hefty tuition fees – which continue to rise in Canada and average more than $6,500 a year for an undergraduate program, according to Statistics Canada. That will help Yann not be bogged down by student loan debt like many other young Canadians. According to StatsCan, one in two students will graduate with student debt.

The first thing the family did was create a detailed budget for Yann, which he’ll likely have to keep adjusting when he actually moves out and sees first-hand what all his expenses are. They broke down the income he would have from savings and working, then subtracted expenses such as food, bus fare, utilities, and paying for internet and his cellphone. One consequence of the COVID-19 pandemic has been that rents have dropped in Toronto, down around 13% from the year before. Average one-bedroom apartments now have a median rent of $1,830, so Yann is eager to lock in a lease before rents go up again.

Their budget showed them that Yann could afford a modest bachelor apartment – he is eager to live alone and have fewer distractions when studying. And they plan to have two bank accounts set up for him – one for fixed expenses such as rent and utilities and one for discretionary or variable expenses such as groceries and entertainment, which will make sticking to a budget easier.

The second thing they discussed was getting Yann a low-limit credit card to start building a credit score. They plan to get him a credit card – which he can use for emergencies while learning how to use it wisely.

After doing this early groundwork with his parents, Yann is feeling more confident about setting out on his own in the big city and taking this next big step in his life. Knowing what he can afford before going apartment hunting has made him more hopeful that he can start university on the right financial footing. 

Want to know where your money is going? This comprehensive budget tracker is a great tool to help you track your income, expenses, and savings.

Next in our series: Greta and Gina are a mid-life working couple who have been together for seven years and plan to move in together in Vancouver.

*Yann is not an actual person, but his story is indicative of what many young people are facing and thinking about when it comes to finances and money management. It should not be construed as financial advice. Reach out to a financial advisor to discuss your situation and help determine what you need to achieve your financial goals.

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