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The summer after high school ends sets the stage for the next few years of a teenager’s life. Financially speaking, this is when it pays for them to learn how to match their lifestyle to their income and goals.

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It’s important to gain such money skills before applying for credit, so that there is less temptation to get carried away with a first credit card, car loan or even a student loan.

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Graduation is loaded with expectation and tradition, but the tradition of accumulating debt soon after doesn’t have to hold your new grad back as they embark on their future if they follow these eight steps.

It all starts with a budget

A budget is simply a plan; you determine ahead of time what you want to spend your money on. It means that if life gets busy, you can manage your money on autopilot by following the plan you made when life was less busy. A budget ensures you can pay your rent and cellphone bills on time, have money to go out for dinner with friends, and save enough to cover off not working during exam weeks.

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Scaling up is easier than scaling back

Once you’re committed to car payments, have a fancy cellphone plan and are living a lifestyle supported by credit, going back to school becomes more difficult. Get into the habit of saving before spending to help avoid owing more than you can afford to repay.

Choose a post-secondary path with potential

Whether it’s a six-month or a five-year program, commit to a program that interests you and for which you have aptitude. Also do some research to ensure your interests align with what is needed in the labour market. People say that education is never a waste, but it’s much easier to stay focused and committed if you choose wisely from the outset.

Maximize your gap year

A gap year is more than just a break from life’s commitments. It can be a time to determine what interests you most and what you may want to pursue more formally. It’s a time when teens or young adults can work on developing life skills or gaining experience and new perspectives to help them in their future careers. It can also be a time to save up extra money to pay for future education costs.

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Know your deadlines

Prominently mark deadlines and due dates in your calendar for self-imposed targets and savings goals, bill payments and application timelines for student loans, educational programs and school or work projects. Break your goals down into manageable steps or tasks and implement strategies that will help you succeed. Employ SMART goal-setting techniques to help you achieve your goals.

Gain insight into your transferable skills

Don’t worry if you change your initial plan to attend university into taking a specific program at a technical school or vice versa. Financially, college and trade schools can both turn out well, depending on your motivations. Many high school grads today can’t prepare for their future job because it doesn’t exist yet. Others will achieve success in one career and switch to an entirely different one 15 or 20 years later. They may even have a third career before they complete their working years. But despite the different roles and jobs, the common thread to achieving success is that each job must play to your strengths.

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Plan for your post-secondary costs

Familiarize yourself with repayable sources of funding (for example, student loans) and non-repayable (for example, scholarships, grants and bursaries). Repayable funding needs to be paid back whether or not you complete your studies. Non-repayable funding takes longer to apply for, but the payoff can be equivalent to earning $500 an hour.

Scholarship deadlines for the fall semester are often in the spring, so it may be too late to apply for the coming school year. However, scholarships are not just awarded to first-year students, and they are also awarded for more than just good grades. Along with working and saving up money for school, spend time volunteering, joining a club or researching your family history so that you can apply for as many scholarships as possible next year.

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How to use student loans

If a student loan is your only option to cover education costs, borrow as little as possible. Set the money they give you aside in a separate account and dole it out on a set schedule to avoid leaving yourself short. Any money you don’t truly need to spend, return it to the savings account for safekeeping. If you don’t qualify for a loan right after high school, investigate provincial programs for mature students that you might be eligible for after taking a year off.

Those who choose financing over saving set themselves up to begin their young adult years with obligations that could limit their choices with jobs, where they live and even who their partner will be. Instead, set a goal to pay for school without getting into major debt, then look for ways to make it happen.

Sandra Fry is a Winnipeg-based credit counsellor at Credit Counselling Society, a non-profit organization that has helped Canadians manage debt for more than 26 years.

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