None of my grandchildren have graduated from college yet. When that day comes, I hope they’ll have it a little easier than the current crop of grads.
This is the time of year for commencement ceremonies, with the handing out of diplomas accompanied by inspired speeches about going out, living your dreams and making your mark on the world.
Unfortunately, a lot of this year’s hopeful graduates are going to be disappointed. A survey released this month by TD Bank found that 41 per cent of recent post-secondary graduates took up to a year to find a job after finishing school. No recruiter was standing by the door with offers of big money for these kids. They had to go out and beat the bushes to find work. Only a few found their ideal jobs immediately.
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“Based on a recent study by the Conference Board of Canada, people with highly specialized degrees are the ones in most demand,” says Sue MacDonald, TD’s associate vice-president of everyday banking products. “Technology grads, especially in areas like software programming, are the most likely to find immediate work.”
That same Conference Board report admonished Canada’s post-secondary institutions for not doing more to match their education programs to labour market requirements.
“Aligning skills to the labour market is critically important to our overall economy and Canadians’ life satisfaction,” said Michael Bloom, the Board’s vice-president, industry and business strategy, when the report was released last year. “Skills mismatches can result in underemployment or overemployment, which in turn leads to unhappy employees, and poor workplace performance.”
Another revealing finding of the TD survey, which was conducted for the bank by Environics Research, is that 41 per cent of respondents said that once they started working they earned less than they expected.
“That was the most surprising result to me,” MacDonald said. “The expectation of income is far too high and that’s a shocker for many grads.”
One reason for these unrealistic expectations is that many college grads have never had to deal with the realities of the financial world. They have lived in a cocoon, supported by their parents. Some have had part-time jobs along the way, but never expected that those low pay levels would apply once they had attained a degree.
This may explain why many grads become stressed out when they enter the business world. The TD survey found that almost half (47 per cent) of recent graduates felt anxious or overwhelmed when they found they had to manage their finances on their own. And 60 per cent said they felt guilty about spending money on things that they wanted instead of using it to pay off financial obligations such as student loans.
Ms. MacDonald suggests they should not feel too badly about having a little fun — after all, they’re worked long and hard to earn their degree. But all things in moderation.
“Sure, go out and enjoy a dinner with friends on occasion,” she says. “But be aware you can’t do it every night. Self-awareness of your financial situation is critical and will serve you well in the long run.”
That brings us to the dreaded B-word: budget. No one likes doing it but formulating a spending plan is essential to getting control of your money. It all starts with prioritizing goals — deciding between those things you really need, such as food, shelter and clothes, and those things you want, such as a new Ferrari. The needs obviously get priority. If anything is left over, put it into the wants category.
There are all kinds of online tools to help with the budget process. TD has an app called MySpend, which allows you to monitor your spending from every account with the bank, including credit cards. If you want to know where your money is going, it’s a valuable tool.
There are all kinds of budget templates available online. And you can find a lot of good budgeting tips at getsmarteraboutmoney.ca, a financial education website sponsored by the Ontario Securities Commission.
As for repaying student loans, don’t be in too much of a rush. The interest rate is normally very low and the federal government recently introduced a new regulation that does not require any graduate earning less than $25,000 to make payments.
“Of course, you should make any minimum payment required to protect your credit rating,” MacDonald says. “But once that’s done, focus on paying off higher interest debt, such as credit cards.”
If you run into trouble, there’s lots of help out there, she concludes. “Setting realistic and manageable goals and seeking advice from a trusted source such as a financial adviser is key to tackling new financial realities and starting off on the right financial foot.”