11.1 Financial Goals and Realities

What Are Your Financial Goals?

Whatever it is you plan to do in your future, whether work or other activities, your financial goals in the present should be realistic to enable you to fulfill your plan. Consider these scenarios:

Keri entered university planning to eventually major in business. Her family was not able to give her much financial support, but she chose to attend university because she thought it would help her get into a good graduate business school. She had to take large loans to pay her tuition, but she wasn’t concerned about a budget because she assumed she’d make a lot later on and be able to easily pay off the loans. Yet when she graduated and had to begin making payments on her private bank loans, she discovered she couldn’t afford to go straight to graduate business school after all. She put her dream on hold for a few years and took a job she didn’t much like.

John had worked a few years after high school but finally decided that he needed a university degree to get the kind of job he wanted. He was happy with his life otherwise and kept his nice apartment and car and enrolled in a couple night classes while continuing to work full time during the day. He was surprised how much he had to study, however, and after a couple months he felt he was struggling. He just didn’t have enough time to do it all—so he dropped first one class and then, a couple weeks later, the other. He told himself that he’d try it again in a year or two, but part of him wondered how anyone could ever get through university while working.

What Keri and John have in common is a conflict between their financial goals and realities. Both were motivated to succeed in university, and both had a vision for their future. But both were unsuccessful in finding ways to make their dreams come true—because of money issues.

Could they have done things differently? Maybe Keri could have avoided such heavy student loans by working summers and part time during the school year. Maybe John could have reduced his living expenses and cut back his work hours to ensure he could balance school and work better. Maybe both were spending thousands of dollars a year on things they could have done without if only they’d thought through their goals and learned to live within a budget.

Taking control of your personal finances begins with thinking about your goals and deciding what really matters to you. Here are some things to think about:

• Is it important for you to graduate from university without debt? Is it acceptable to you, or necessary, to take some student loans?
• What are your priorities for summers and other “free time”? Working to earn money? Taking nonpaying internships or volunteering to gain experience in your field? Enjoying social activities and time with friends?
• How important is it to take a full load of classes so that your university education does not take longer than necessary?
• How important is it to you to live in a nice place, or drive a nice car, or wear nice clothes, or eat in nice restaurants? How important in comparison to your educational goals?

There are no easy answers to such questions. Most people would like enough money to have and do what they want, low enough expenses that they don’t have to work too much to stay on budget, and enough financial freedom to choose activities without being swayed by financial concerns. Few university students live in that world, however. Since you will have to make choices, it’s important first to think about what really matters to you—and what you’re willing to sacrifice for a while in order to reach your goals.

Make More or Spend Less?

That often becomes an issue for university students. You begin by setting up a realistic budget and sticking to it. A budget is simply the best way to balance the money that comes in with the money that goes out.

For most university students, the only way to increase the “money coming in” side of the budget is to work. Even with financial support from your family, your savings from past jobs, student loans and the like, you will still need to work if all your resources do not equal the “money going out” side of the budget. The major theme of this chapter is avoiding debt except when absolutely necessary to finance your education. Why is that so important? Simply because money problems and financial barriers are a prominent factor in causing students to drop out of university^[1].

This chapter includes discussion of how students can earn money while in university and the benefits of working. But working too much can have a negative impact by taking up time you might need for studying. It’s crucial, therefore, whenever you think about your own financial situation and the need to work, to also think about how much you need to work—and consider whether you would be happier spending less if that meant you could work less and enjoy your university life and studies more. As we’ll see later, students often spend more than they actually need to and are often happier once they learn to spend less.