BY ANDREW SEMKOW
Finance can be a scary thing for students. A 2016 study found that students graduating have student loan debts, that average around the mid-high $20,000s. So what can you do to get ahead? What do you need to do if you want to own a house or a car? Louis Rumantir is a financial advisor with TD Canada Trust, and he provided some insight into saving for the future.
Forced savings are No. 1
“No. 1 definitely is you have to have some sort of forced savings,” says Rumantir, who suggests you set aside 10 to 20 per cent of every pay check for savings and emergency situations. There are other options such as Retirement Saving Plans and Tax-free savings accounts, while it may not be the most popular option when you’re graduating, setting aside money can set you up for bigger purchases such as cars and houses. If you find a permanent job, look into retirement or pensions plans the company may offer.
You don’t need to wait until after you’ve graduated to get into the habit of forced savings, having your money saved in a hard to get to account makes it easier to save.
Graduating with debt
“Most of us come out with debt, that’s just the reality of how the education system works,” says Rumantir. Identifying how much the debt is costing you, then figuring out wether you can invest in something that will earn you more than your debt.
If you find yourself having to job hop increase the amount you put into forced savings to 30-40 per cent, your goal should be having three months salary ready for when you start looking for new employment.
Get ready for the future
“A lot of dealerships offer incentive programs for new graduates” so take advantage of them. “I always encourage students to put money into the RSPs, the reason why is aside from the fact that if you put money into your RSPs, the amount of money you put into you’re RSP’s is deducted from your taxable income at the end of the yea, you probably get a big return at the end of the year.”
There’s also a plan called a First Time Home Buyer’s plan that lets you take money from your RSP tax-free, and use it for a down payment on your house.