For most Leaving Certificate students, their concern over the past year was whether they would get enough points for their college course of choice. Now that the results and CAO points are out, this concern has shifted to finance.
College is a time of learning, growth, and exploration, but if you want to learn good financial habits that will last for life, this is the time to do so.
My financial tips will serve you even after you have graduated.
Realistic budgeting is a skill that will take on huge importance as you make scant resources go further. Work out your financial position. Account for your likely incomings, whether this will consist of grant funding, part-time work, or parental financial support and then look at your fixed expenses, such as rent, books, utilities, and food, etc. Next, make a list of your discretionary expenses, such as clothing and entertainment.
Add both your fixed and discretionary spending together, then subtract that from your income to make a basic budget. If the costs are more than the income, then you need to get your thinking cap on, and changes will need to be made! If you have money left over, then this will be shifted into your savings.
Your budget will help you monitor what you are spending. Ensure that you are meeting your basic financial obligations before you start to spend on frivolous items that are unnecessary for your survival. Remember, college is a time when you earn very little money, so you need to make some sacrifices.
An emergency fund is essential. This pot of money will protect you if you need to deal with a financial emergency.
When you have a little extra money, put it towards this fund.
While you’re in college, these emergencies will be minor, but as you get older and take on more responsibilities, the number of potential emergencies increases. Examples of such an unexpected event would be emergency car repairs or dental work, etc.
If you have an emergency fund, then you will avoid putting these costs on your credit card and will ensure you are in a position of financial safety should anything unexpected ever arise.
While it is difficult to avoid student-loan debt altogether, avoid expensive or excessive debt.
Credit-card debt can carry high interest rates and excess debt can hold you back financially for years after you graduate. If you take out a credit card, pay off the balance every month. This will protect you from revolving credit-card debt, which can be crippling. If you need a loan to make ends meet, some financial institutions offer preferential terms and rates on student loans. Shop around for the best deals.
AIB have an attractive offering: You can borrow between €600 and €3,000 for each year of your course and make interest-only repayments until you graduate, at which stage you will then start making full repayments. Also, keep the terms of any loan agreements and protect your credit-rating profile, as this will follow you far beyond college and, if you default, could restrict your access to credit in the future.
Whoever pays your fees can apply for tax relief of 20%. This applies to qualifying third-level courses and there is a maximum ceiling of €7,000 per course, per person, per academic year. See www.revenue.ie for further details.
Remember to have fun and graduate without any regrets. You’re a college student, you’re young, you only have one life, and while it’s important to be smart with your money, you need to enjoy your life as well.
These basic financial principles will act as the base for making smart money decisions, not only during your time in college, but for the rest of your life.
Wishing the Leaving Certificate class of 2021 every success on their chosen paths!