Working Towards Financial Wellness

A pink piggy bank sitting against a pink backgroundWritten by: Hanbi Lee

Photo by: Paweł Czerwiński on Unsplash

Living as a student can be pretty expensive, with hefty tuition bills, endless need for education supplies, expensive textbooks, and the cost of living if you’re living away from home – all while earning little to no income or having an inconsistent income. Nevertheless, it’s critical to consider financial literacy and work towards financial wellness as you transition into financial independence. 

Unfortunately, there’s a modern narrative that suggests we, as young people in our late teens/early twenties, should live it up now and achieve instant gratification because we’re young (and we’re only young for so long). While this is totally fine to do from time to time, living this way consistently is really at the cost of your own future. It doesn’t help that social media tends to promote extravagant lifestyles that tempt us into spending money on things we don’t actually need. Over time, the consequences of these luxuries can add up just as quickly as the gratification dissipates. And struggling financially can affect your mental and physical health. All in all, achieving financial wellness is the best gift you can give to yourself

So, what is financial health and how can we achieve it?

Forbes defines financial health as your ability to have a healthy financial life and preparedness for any financial crisis. There are many factors that can contribute to the financial wellness of an individual, but here are the main ones:


  • To start, list out all your current expenses and all your income. If you’re not sure what your expenses are, check your bank statements from the last 3 months. This can also be a good way to start observing where your money has been going. Then looking at how much income you have, start to shave off expenses as you see fit and set limits to how much you want to spend on what. Ultimately, your money in should be greater than your money out in order to start saving.
  • If you’re unsure of how to divide up your expenses, here is a general rule of thumb that can be a good place to start: the 50/30/20 Rule. This rule suggests that 50% of your income should be spent on basic necessities/essentials (e.g., rent, transportation, groceries, etc.); 30% should be spent on luxuries (e.g., shopping, eating out, entertainment, etc.); and 20% should be put away into your savings.
  • Some people like to track what they spend in detail, which can be helpful if you feel that you need to be stricter with yourself. You can track your spending manually by inputting your expenses on an Excel spreadsheet, or if that’s too tedious, there are a lot of great apps that do the work for you. My personal favourite is Mint (aka Intuit Mint), which tracks your spending and categorizes them by hooking your account up to all your bank accounts. It also allows you to set budgets so that you can see whether you’ve gone over your spending limit.
  • The easiest way to start saving is by setting up automatic withdrawals. Your bank will automatically transfer the amount/percentage that you’ve set from whatever income you receive into your savings account. That way, you can be sure that you are saving money.


At this point, you might be wondering – what am I saving for? That’s a great question to ask because often, knowing what you’re saving towards can be a great motivating factor to help you save better. Here are some things to consider saving towards, and how to save more effectively:

  • If this pandemic has taught us anything, it’s that life is truly unpredictable, and you don’t know when you’ll be hit with an unforeseen crisis. It’s important to be prepared for these moments so that we are able to continue living with as little impact as possible despite the emergency. Hence, one of the most important saving goals for financial wellness is accumulating an Emergency Fund. An emergency fund usually makes an amount that will cover 3-6 months’ worth of basic necessities (the more the better). This includes (but is not limited to) housing, food, transportation, bills, etc. You never know what could happen, but with an emergency fund, you can be prepared for anything.
  • As I said earlier, having saving goals can really motivate you to work towards saving more. Try to set both short-term and long-term goals for yourself. A short-term goal might be something like buying an expensive bag or shoes that are outside your budget or saving up for a trip. Long-term goals might include saving up for a down payment for a house or saving money in your retirement fund.


Saving can seem daunting when you’re unsure of what to cut out. Here are a few suggestions that might help:

  • To avoid over-purchasing at the grocery store, make a list before you go and look for coupons you can use. Eating-in, in general, will help save loads of money compared to dining out.
  • Take advantage of your student discounts while you can!
  • Check your subscriptions – there may be things you’re paying for that you’re not using often enough to justify the monthly cost. If you really don’t want to cut out a particular subscription, consider sharing with a friend and splitting the cost.
  • Try buying generic brands. Often, they are comprised of the same ingredients as brand-named items.
  • Buying second-hand not only saves you money but is great for the environment too. Especially if you know you won’t be using it a lot or for more than a couple of years, consider buying it second-hand. Great items to buy second-hand as a student include textbooks, clothes, and furniture!

Pay Off Debt

One of the most important aspects of financial wellness is to crush whatever debt you may have. In fact, paying off your debt should be a priority in your financial plan because the longer you hold onto it, the more money you are flushing down the drain in the form of interest. In particular, debt with high-interest rates, such as credit card debt, should be targeted first. 

As students, we are also quite familiar with having large amounts of low-interest debt – aka our student debt. While that amount might seem daunting, it’s important to make a plan on how you’re going to pay off that debt consistently and as a priority.


Once you’ve saved up an emergency fund, paid off your debt, and have a steady and consistent budget in place, you can start thinking about investing. Investing is a great way to have your money grow over time without doing anything yourself and is a much better alternative to having all your money sitting in a savings account, where your money is growing at a much lower rate. (Of course, it’s still important to have a decent amount in your savings too.) There are a lot of resources out there that can help with investing, but here are a few of the basics:

  • Stocks: an investment that represents a share in a company
  • Bonds: a loan to a company/government that pays investors a fixed rate of return over a set time frame
  • Risk vs Reward: the risk and reward are correlated – i.e., high risk, high reward
  • Stocks are high risk, bonds are low risk
  • Investment Fund: a collection of stocks and bonds that a number of individual investors pay into; it reduces the risks of investment because of the advantage of working as part of a group


On the topic of investment funds, here are some types of funds:

  • Mutual funds: someone who understands the stock market manages the fund and chooses which stocks/bonds would be the best to invest in and include in the fund – that someone charges a fee for this service that is a percentage of the amount that is invested. The pro is that it helps diversify your portfolio. The con is that the cost of a fund manager can be expensive.
  • Index funds: a portfolio (i.e., collection) of stocks/bonds that are designed to track a particular market index. A market index is a hypothetical portfolio of investment holdings that represents a segment of the financial market. In other words, the fund is passively managed by a formula to match the market, rather than actively managed to beat the market. Simply put, it’s like a sample of the stock market. The pro of this is that it reduces the cost of the fund manager, while also diversifying your portfolio.


Now, what the heck does “Diversify your Portfolio” mean? There’s a common saying in investment that says, “Don’t put all your eggs in one basket.” If you only invest in Microsoft, and Microsoft’s value plummets for whatever reason, you’ve lost all your money. Put money into different companies from different sectors.

You should put money in for a LONG time. Don’t expect your money to grow overnight. A lot of these investments take a long time to grow a substantial amount, but with some patience, there will be substantial growth. That’s why it’s important to invest as soon as you can. The sooner you invest, the more room your money will have to grow. If you want to try timing the market (high risk), there can be good payoffs, but you have to be more hands-on. Here are some tips:

  • With the help of apps like WealthSimple, you can trade your own stocks by yourself with ease.
  • Do your research – read the CEO/CFO’s statements, press releases of the company you’re thinking of investing in to get a sense of which direction the company is headed.
  • Know the climate – read the news and predict what products/services that companies offer might be something that could be really important for consumers in the future.


When you start to take control of your finances and make conscious efforts to save, you’ll start to see the effect of it in various areas of your life. It’s still important to treat yourself once in a while, but in the long run, your future self will thank you for the efforts you're making today. 

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