Financial Advice for Students and Life After School
Graduation is exciting, and a time when most young adults are figuring out their next steps. You’ve learned a lot in school, but have you got a hang of your finances? If not, don’t worry, because in this episode of Building Better With Brandon, we’ll help you with what you need to know.
So what do some students wish they knew more about financially before moving away from home? Things like budgeting, financial planning resources, and realistic expectations for expenses like rent were some of the things young adults told us they wished they knew more about before moving out.
Jermain Dacres, Financial Planner, TD Wealth, says there are three big things students need to know before they move out: budgeting, banking set-up, and building credit.
Dacres explained that budgeting requires figuring out how much money you will be receiving from sources like loans, family, and working, and what your expenses will be during that period.
“Try to keep those expenses below your income so that you have a bit of room for savings,” Dacres shared.
Next up, setting up your bank account. This includes considering which types of accounts you will need, if you should be setting up pre-authorized transfers for saving, and more.
“The third, which I think is very important, is building. Start building your credit. Get a product in your own name,” Dacres explained, adding that this can be as simple as getting a cellphone in your name.
“You start building up a history of payment for yourself, and in the long run that will really help a lot.”
Why is building credit important? When it comes to things like buying a house, taking out a loan, and renting, having a good credit score is necessary.
“The credit score is a numerical rating system that tells you how well you’ve been handling your credit products,” Dacres explained.
“It also tells lenders how risky you are to lend to,” he continued, adding that a credit score generally ranges between 300 and 900. In addition to the number, you will also receive a word grade, like poor, fair, good, very good, or excellent.
Dacres explained that a credit score is derived from a credit report, which is a summary of all of the credit products you have. This includes things like credit cards, lines of credit, and even your phone bill. It will show information about things like failing to pay your bills or being late to do so.
This works in your favour when you build up a good credit score, allowing lenders to know that they can trust you with products like lines of credit, which come in handy when you’re adulting, or doing things like furnishing your apartment. Some students even told us that landlords are asking to see their credit scores before agreeing to rent a unit to them.
Jermaine Dacres gave us the scoop on things like passive income, where you can learn more about your finances, and everything else students and recent graduates need to know in this episode of Building Better With Brandon.
