With spring underway, university and college students who are enjoying a well-deserved break from their studies will soon be joined by their high school counterparts. In the summer, students earn money that will help them get through the next school year. For many, this money is the difference between a financially stressful school year and one where the student can focus on “job one,” which is to do well academically.
The concept of saving for the future is something that does not come naturally to everyone. It takes discipline and practice to save, just like it does to kick a habit, to diet, or to change a particular behaviour. Parents can influence a student’s behaviour by acting as a positive role model. Allowing a child to observe financial selfdiscipline helps students understand value and offers encouragement. And sharing tips and ideas about how to make saving a regular part of one’s lifestyle can prove valuable.
Set a weekly savings target: Determine, in advance, a reasonable amount of spending money needed each week during the summer. Then, translate that dollar amount into a percentage of the individual’s regular pay cheque. For example, consider the situation where the individual feels they have spending needs over the summer months of $100 per week, while their weekly pay cheque amounts to about $400. In this case, the goal would be to set 25% of the weekly pay aside for spending and target 75% as the amount to be saved weekly. Moving 75% of the weekly pay into a separate savings account helps isolate the savings using a clear, easy-to-understand target. A student who is 18 or older may want to consider using a Tax-Free Savings Account (TFSA) for this purpose.
E.O. & E.
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Contributors to this edition:
James W. Kraft, cpa, ca, mtax, tep, cfp, clu, ch.f.c.
Deborah Kraft, mtax, tep, cfp, clu, ch.f.c.