Switching life from Rupees to Dollar was quite confusing at first. The first time I got out to get myself a bank account in Toronto, I had $400 in my wallet and my friend’s brother was telling me how people here barely keep cash with them. I remember buying my first Tim Hortons with a $20 bill and the cashier gave me way too much change than my wallet could fit. I was accustomed to using cash. Actually, that's not true. What I was really accustomed to was this: Figuring out a budget and asking my mother for that exact amount before going anywhere.
In today’s post, I want to talk about the spending habits that I developed over the last few years especially now when I am earning and bearing all my expenses (waited my entire life to say these words :') ).
Psychological security: When you are in a foreign country, having some extra savings can help you sleep better at night because there aren’t too many people you know here. The higher that amount, the better. But, as a student, I would really recommend never having your bank account go below $500. It can be very hard for some international students to afford life in Canada but if our willpower gets us a thousand miles away from home, putting aside that $500 should be a piece of cake.
Tip: Lock it into a 1-year GIC every year and only cash out the GIC if you need it.
Tracking: I have always been decently calculative with money. So, in my first semester, I decided to write down my expenses in a notebook and do a month-end calculation. I couldn’t continue with the practice for very long, but those few months of writing things down helped me get a good idea about my expenses and I was able to keep my spending habits under control.
Tip: This is not an ad but discovering an app called “Dollarbird” has been a blessing. It's extremely simple to use and helps you track your daily expenses. You can categorize your expenses and get a very clear picture of where you spend the most money.
Budgeting: Your coffee bill adds up. If you eat out for every meal, the cost, and the cholesterol BOTH add up. Budgeting really helps me to keep my finances under control. Set up a budget for your monthly grocery and outside meals. I love eating out but eating at home is SO MUCH CHEAPER. Sure, it's not as good but you’ll eventually get bored of outside food if that’s all you are having. I wish I did this earlier in my university years but get yourself a lunchbox, a water bottle, and a travel mug for tea/coffee. Take more time in your grocery runs, research, and cook at home. Buy instant coffee packs that will last you a month and cost you what 3 cups from Tim Hortons would have. There are microwaves and water heaters in every school and office space – please make use of them to save money. And when you do, treat yourself with an outside meal that you deserve.
Credit Card: Should you get one as a student?
Credit cards are a double-edged sword. My father, who is extremely risk-averse when it comes to finances, always talked about the scams that credit card companies put people into. I realized after coming here that credit cards don’t ruin your life if you stay on top of the bill payments. However, it could become a monster if you think you can max out your credit card limit without having that money. The concept of a credit card is you are not actively spending your own cash but borrowing from your bank and (ideally) paying them back on time. When you don’t, they charge you interest and with the time you could owe your bank a lot more than you borrowed. A bit too complicated? Here is why it could be worth the hassle -
Using a credit card helps you build credit history and credit score and a good one could come in handy if you plan to live in Canada in the long run. Also, when you use your credit card for daily expenses instead of debit, it allows you to park your money in a savings account and gain some daily interest until the credit card bill payment date.
How things changed after I started to work:
I started working full time in October 2019 and managing my finances has felt easier ever since. As opposed to going to school and working part-time, I know how much income to expect every month and how much of it to save. I was initially a little hard on myself with the savings, but I am in a more comfortable space now after having saved 30% of my annual income. I have multiple personal goals I am saving for but especially in these unprecedented times, the goal is to save enough money that would last me through 6 months of unemployment if needed. I really hope you find my two cents on personal finances to be helpful. My approach to organizing finances grew since my first full-time job was at a bank and I am a lot more aware now than I was 2 years ago. (Dating an accountant has also helped but I will not feed his ego in public for the sake of domestic peace). It's important that you keep an open mind to learning. You don't have to have a knack for saving but it's a discipline that you can adapt to. Try it out, give yourself a few months to adjust, and don't forget to thank me with a big, fat cheque when you become a millionaire :D