PEI

2 basic steps for financial literacy

A UPEI business professor says there are two basic steps students can take to keep their finances under control.

UPEI Student Union presents Financial Literacy Week

University students often find themselves managing their money for the first time without the skills to do it. (Getty Images)

A UPEI business professor says there are two basic steps students can take to keep their finances under control.

Andrew Carrothers, who is helping out with Financial Literacy Week at UPEI, told CBC News university is an important time for learning how to keep your financial house in order. For many, it's the first time people will be in charge of their own money.

UPEI business professor Andrew Carrothers argues most people could cut their discretionary spending in half. (CBC)

"It can be a little bit overwhelming. You have the freedom to go and spend your money on whatever you want and you don't necessarily have the good habits to exercise restraint when you need to," said Carrothers.

"Early in your life you can run into situations where you develop some bad habits. If you develop bad habits early it can have huge ramifications later in life."

Carrothers said there are two basic steps for developing good habits.

  1. Live within your means

  2. Identify the differences between wants and needs

To live within your means, says Carrothers, create and use a budget so that you have a little money left over at the end of each month.

Separating wants and needs can help you keep that budget. Carrothers argues most people can cut their spending on wants in half.

One of the biggest culprits for overspending is eating out. Even something as inexpensive as picking up a cup of coffee can add up if you do it every day.

Financial Literacy Week events include sessions on investing, scholarships, how to budget, and a Q&A booth on Thursday.

With files from Compass