As students prepare to make the leap from high school to college or university, many have not been prepared for life on their own, especially when it comes to money. Low financial literacy can lead to major debt challenges down the road. Coming out of university with major debt is one of the worst things that can happen to you. Not only is it difficult to make payments on a low, entry-level salary, but it may even limit your ability to borrow money in the future.
Therefore, learning how to budget and borrow money wisely is essential to ensuring future financial well-being.
When students think of debt, they most likely think of student loans, but it’s not just student loans that students need to be cautious of. Credit card companies love students. They hand out credit cards like candy on university and college campuses. They know that full-time students are, for the most part, strapped for cash, so they tap into that market. For students who are financially illiterate, it’s very easy to misuse credit cards and create unnecessary debt. I’m not saying that Ontario students shouldn’t have credit cards. What I am saying is that students need to be careful with how they use their credit cards and make sure that they don’t bite off more than they can chew.
I’ve seen kids who are in their early 20s who are declaring bankruptcy because they are drowning in credit card debt. This is certainly preventable if students are financially literate. Talk to your kids about finances and budgeting before they leave for post-secondary education. You don’t want them to learn the hard way!