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.

You often hear it said that university will feature some of the best years of your life. Chances are, they’ll also be some of your most broke years.

University is an exhilarating time because so many new things are happening. One of those new things is learning how to handle your money.

There are all sorts of things to spend money on: clothes, entertainment, socializing with friends. But in order to stay out of debt and build good habits for your financial future, you need to set boundaries for yourself, too.

Kingsley Chak, Scotiabank’s senior vice-president of deposits, savings and investments, gave us some tips to budget below.

Consider the 50-30-20 budgeting rule

Budgeting is not a one-size-fits-all game, but universal rules like the 50-30-20 split can help give you an idea of how you should be dividing your income.

The idea is that 50 per cent of your money should go toward necessities like rent and groceries. Thirty per cent goes toward what you want (this is the fun stuff). And 20 per cent should go to savings.

Obviously, as a student you’ll have little or no income, so you may have to spend more on necessities and less on saving.

Mr. Chak says students don’t necessarily need to feel guilty about not saving either, especially if saving would require them to work more and spend less time on their studies.

Use a spending tracker

Some banks such as Scotiabank offer spending trackers, which group your spending into different categories, such as groceries, entertainment and dining.

Mr. Chak says these are vital tools that allow you to look at your past habits to see where you might be overspending. They also allow you to set a budget for each category and to track your spending throughout a month.

That way, Mr. Chak says you can see, for example, if you’ve already used 50 per cent of your monthly dining budget in the span of a week and adjust accordingly.

Set a treat budget

Postsecondary education is stressful, and the Toronto Metropolitan University’s financial planning office says you need to take into account the costs of coping. That could include having to use food delivery apps when you’re cramming for finals, buying some sweet treats or taking a night off to go to a concert or a movie.

By saving for this in advance, you can avoid getting into credit card debt, which could add even more stress to a rough situation.

Set guidelines for what is and isn’t an expense to use with your student loan

We’ve all heard stories of people buying a gaming console or going for a big night out after getting their student loan payment in one big lump sum.

While those are obviously misuses of student loans, other expenses might be in a grey area because these loans are meant to support your cost of living.

Ask yourself what a legitimate expense for you might be. You may decide to restrict your food budget to groceries, for example, or that’s it okay to use it for food delivery.

More from the back-to-school series

The Globe and Mail, August 26, 2023