How do I manage my personal finances?

For many students April is not only the season of all-night studying, but also of scraping together pennies to afford food and other necessities for those last few weeks before returning to the financial haven of a summer job. How can your personal financial choices during the year help prevent resorting to malnutrition, boredom, and sobriety come exam time? Maclean’s spoke to Sherman Cheung, a Associate Professor at the DeGroote School of Business at McMaster University, to find out.

Maclean’s: What is the key to personal financial management for students?

Sherman Cheung: Life is simple, you have to cover expenses. Expenditure control is the key; students do not really have major expenditures like other adults. They cannot really increase their income, so controlling what they spend is key.

M: What would you say are the largest mistakes that students make with their personal finances?

SC: A lack of planning and a lack of self-restraint. I know that it is fun to go out and have a good time, it is human nature but it costs too much to go out all the time. You have to practice self-restraint to keep your budget under control.

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M: Some universities offer courses in personal finances. Why do you think that universities should be offering these courses?

SC: I look at financial literacy as half of overall literacy because it is a life skill that students can use. That is not to say that literature, music, and arts are not important, I think they are just as important, but I don’t see any reason why not be teaching financial literacy. I consider it a part of the literacy that a university student should have when they graduate.

M: What should parents be doing to assist their children develop their financial management skills?

SC: It is important that students know what life is like in the real world. Money does not grow on trees. Parents should make their children have a part time job to help them understand the value of money.

M: What is the one thing that students can do, that most students are not doing, that can help their financial situation?

SC: Expenditure control is the key, cutting back on the nights at the pub will help. It is discretionary spending, there is nothing that students can do about tuition but they can control their spending on nights out.

M: What advice do you have for a high school student planning to attend university?

SC: Get a summer job; it is the best real world experience. It will give them a good opportunity to learn financial management. It is an important first step.

M: How can students conceptualize their financial management?

SC: For students without a large amount of expenses, software programs and spreadsheets are not really useful or needed. Banks allow you to download your statements, download them and check your expenditures against your income.

M: Last Question: Report on Business or Financial Post, which do you read?

SC: They are basically the same; they are both conservative pro-business publications and cover the same stories. The real difference is in the front, the news portion of the paper. I read both papers and do not see much of a difference in the business section.

-with Joey Coleman