Before Krystal Yee became a bona fide personal finance blogger, she graduated from college with $20,000 of debt.

"I wasn't financially savvy," says the Vancouverite, who has been writing about her financial turnaround for nearly a decade at Give me back my five bucks. "When I got student loans and I got a credit card, I didn't really know how to manage that kind of money."

She spent the $20,000 on school, as well as clothes, entertainment and other wants.

After graduating in 2006 from a two-year program at Victoria's Camosun College, Yee spent the next year "digging myself out of that mess."

Today, many students find themselves in a similar situation with a large sum at their disposal to pay for school and, financial experts say, little savvy on how to handle it.

Being up front and real with yourself ... is a really important exercise - Krystal Yee, personal finance blogger

Young people tend to adopt a "lottery winner mentality" when they suddenly have access to thousands of dollars, says Kelley Keehn, a personal finance expert.

"You have the foundation of a house and you just got an office tower," says Keehn. "It's gonna fall over 'cause it can't stay up on the foundation of a house."

However, there are some simple steps students can take to avoid running out of money before the end of the school year and acquiring unnecessary debt.

Budget money like a meal plan

Every student needs a balanced budget to make sure they're not spending more than they're bringing in.

It's simple math, says Laurie Campbell, CEO of Credit Canada Debt Solutions.

Students have to add up their monthly expenses like tuition, rent or dorm fees, groceries and entertainment, and ensure the total is equal to or less than their income, including savings, student loans, the bank of mom and dad and part-time employment.

Campbell compares budgeting money to how students should ration out a meal plan in residence.

"You don't go pig out on the meal plan ... in the first four, five months and then have nothing to eat for the next three months," she says. "It's the same with the money these individuals are getting."

Track spending for a realistic budget

Yee suggests students track their spending for a few weeks before creating a budget to ensure their numbers are realistic.

Often, people perceive they're spending less in certain areas, like entertainment or groceries, than they actually are.

The first time Yee tracked her expenses?

"I was shocked at how much money I was spending," she says.

She had been budgeting $100 for groceries and $20 for coffee a month, but learned her spending was closer to $250 and $50.

"Being up front and real with yourself ... is a really important exercise," she says.

Avoid 'lure' of credit

Without a realistic budget, it's easier to overspend and rely on credit to cover the shortfall.

Keehn calls this the "lure of credit card."


Credit cards generally have interest rates that hover around 20 per cent, though some can be as high as 30 per cent.

Post-secondary students are practically guaranteed approval for a credit card, she says. For so-called starving students that can be hard to resist.

But not paying off a credit card balance comes with a stiff penalty. Credit cards have some of the highest interest rates, usually hovering around 20 per cent but potentially as high as 30 per cent.

"The best antidote to that is to crunch the numbers," Keehn says.

When students feel tempted to reach for a credit card to pay for something they want but don't need, she says, they should question how long it will take to pay off the card balance.

Remember, emergencies can happen

Students should try and have a bit of money set aside in an emergency fund, Yee says, to avoid relying on credit when they're in a bind.

"We like to think that, you know, we'll stay healthy or nothing will happen," she says.

But unforeseen emergencies can happen. For example, a student living far from home may need to pay for an expensive flight home if a family member falls ill.

"It's nice to have that money available there for you instead of having to reach for your credit card and not knowing how you're going to pay it back."

Don't make dangerous comparisons

It may be tempting to use credit to cover little things here and there, like a concert ticket or an extra pint of beer, when it seems like everyone else on campus is spend-happy.

Keehn cautions against these kinds of comparisons.

People who constantly spend, like buying new clothes or jetting off on extravagant vacations, without wincing are usually financed through the bank of mom and dad, or debt.

"You don't know if they're getting into trouble," she says.

Keep things balanced

To Yee, it's all a matter of balance.

The best antidote ... is to crunch the numbers - Kelley Keehn, personal finance expert

"If you go out for dinner with friends one night, perhaps you can't go to the bar the next night."

It's important to make a budget before starting school to discover any unexpected problems, she says.

Perhaps a student will learn their education and living expenses outweigh their income. 

Then they can ask themselves how to fix this shortcoming, like picking up more part-time hours or applying for additional scholarships, before it becomes a real problem.

"Student life is not an easy life," says Credit Canada's Campbell. "A lot of times it means getting a job while you're in school or living on a very, very strict budget."