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Financial Success After Graduation


“It’s easy to overspend when paying with plastic,” Smith explains. “When we just punch in a pin number, how much we’re spending doesn’t really resonate. You could spend a dollar or you could spend a thousand dollars. The whole process is very quick. The total is on the screen and then it’s gone.” And this benefits banks. “The banks like this because they’re making interest off of us. They put these methods of payment out there hoping that we’ll spend more and go into debt,” adds Smith.

Since debts incur interest, Smith suggests the best financial move recent grads can make is to pay off all loans as quickly as possible, and then focus on long-term financial goals, including RRSP contributions and personal savings.

“Paying down debt is one of the best investments people can make because if you’re paying even 5 per cent interest and you pay it off, you made 5 per cent after tax return. There is no risk to that at all. That’s what you made. That’s a really solid investment,” says Smith.

In cases where students have multiple loans from government agencies, financial institutions or credit card companies, a good strategy, according to The Globe and Mail,is to pay down high-interest debt first, which will save money on interest payments.

The Key to Long-Term Financial Success

While paying off debt takes planning and discipline, staying debt-free is one of the major keys to long-term financial success, advises Market Watch.

Smith said that one of the largest financial pitfalls facing society as a whole is that people believe it’s n

Image courtesy of James Almond via Flickr

Image courtesy of James Almond via Flickr

ormal to have debt. However, this mindset is relatively new, created by a consumer-driven society. From a historical standpoint, society hasn’t seen lifelong debt as responsible or financially viable.

“For students, it can be normal to get into debt when you’re going to school, but it’s not normal to carry

that debt for years and years and decades. People need to say, ‘I got into debt for a good reason, to get an education, and now I’m using my education and working my tail off to become debt-free. And I’m not going to be using my hard-earned money to be paying banks and other institutions interest for the rest of my life,’” says Smith.

Having a real grasp on where you spend your money leads to smart spending habits that Market Watch shows support long-term financial security. The first step is to invest time and a dedicated effort into creating a realistic and usable personal budget — a spending plan unique to your needs and goals.

“People need to start with a clean piece of paper and then write down where they spend their money, including every time they make a debit or credit purchase. Every night, review that list and you’ll have a really heightened awareness of where your money goes. Then, create a budget that’s going to work for you,” counsels Smith.

To develop a successful spending plan, students should investigate budgeting tools and methods in order to find what works best for them. In some cases, this may mean sitting down at the table with a pencil and recording expenses in a notebook. Others may prefer electronic tools offered by companies like Intuit that demonstrate how to create a budget, live within that budget, and monitor financial progress.

Selecting the right budgeting tool is like finding a new pair of shoes. There are many options to choose from, but at the end of the day, it all comes down to finding the right fit. “We’re all individual and unique. What works for one person might not work for the next. We all have to go out and find what resonates with each of us. That’s when we find effective tools to help us manage our money,” says Smith.

Going Debt-Free

It takes time and dedication to complete a post-secondary degree. When grads put the same effort towards developing a plan to pay down student debt and remain debt-free, they can enter the workforce on the path towards financial success. As Smith says, “financial success is really about learning how to be debt free, not learning how to live with debt.”

Melissa Goertzen is an information manager and writer based in Halifax, Nova Scotia. In October 2012, she graduated from the Master of Library and Information Studies program at Dalhousie University. To learn more, please visit her website at melissagoertzen.wordpress.com.

Image courtesy of Andrew Currie via Flickr.
Image courtesy of James Almond via Flickr.

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