Working out a budget for the year at university can seem daunting to many students. As a young adult, you may not have much experience with managing your finances, and your time at university could be your first opportunity to get to grips with creating and sticking to a budget.
Budgeting is very useful for students who have a limited income and want to make sure that they are being careful with their money and not over spending. A lot of students will be relying on student finance, and potentially part-time work, if possible.
Having a better understanding of your income and outgoing expenses can help you to manage your money more effectively, and hopefully mean that you have money left over to treat yourself!
Whilst we are not qualified to give proper financial advice, we can offer some simple tips that have worked for many students before, and can make managing your finances simpler and less intimidating.
Tip 1: Understand your income and expenses
The first step to creating a budget is to understand what your income and expenses are. Looking at your budget on a monthly basis will make the numbers easier to deal with, and should also make it simpler to keep track of if you are keeping to your budget.
Things that need to be included in your budget are any monthly outgoing and incoming expenses. These will include your rent (if you are renting private student accommodation), any household bills that aren’t included in your rent, groceries, transportation costs (such as bus tickets, petrol/car parking or train tickets), broadband, mobile phone contract (if you are paying), and TV licence (important if you want to watch terrestrial television or use some catch-up services).
In terms of income, you should include any salary you receive from part-time work (if applicable), any allowance you receive (from parents, grandparents, etc.), any monthly payments you receive for grants or loans.
Tip 2: Set financial goals
When you fully understand your income and expenses, you can then take your next step and set some financial goals. These goals could include building up your savings, creating a pot to afford a study abroad programme, go travelling, or gain a professional qualification.
Tip 3: Create a budget
Sitting down and creating your budget is the next step. There are several methods for budgeting, but the most common one is known as the zero-based budget. This method suggests that you allocate every last penny to something, whether that is an expense, such as bills or rent, or a long term savings goal, such as your emergency fund or holiday spending pot. This means that at the end of the month, you will have no money left that has not been put somewhere useful.
To create your budget, you need to start by listing all of your income sources and the amounts they are. Then, you need to extract your expenses from your income. It helps to start with your fixed expenses (such as rent and bills), and then move onto your variable expenses (such food shopping and entertainment). You should then allocate any leftover income to your financial goals.
Tip 4: Stick to your budget
Once you have created your budget, the next challenge will be to stick to it. Whilst this could seem daunting, you should remember that you have a plan and that makes it more manageable. Apply a little bit of discipline and self-control, and you’ll be well within your budget.
Here are a few tips that might help you to stay on track:
- Use a budgeting app or a spreadsheet to track your income and expenses. This makes it very easy to see what you are spending and how much money you have left in each category at the end of the month. This can also keep you accountable, as you are seeing your spending in writing/numbers.
- Set up automatic transfers to your savings account. Direct debits and standing orders mean that you don’t have to manually do anything to work towards your financial goals.
- Avoid impulse purchases where possible. These are purchases that you have not budgeted for, and are not necessary. For instance, a new pair of trainers that you do not need, or a new electronic device that you don’t need.
- Find ways to reduce your expenses. For example, shop around for cheaper phone or broadband contracts, try to cook at home instead of eating out, and take public transportation instead of driving (where possible).
- Be flexible. Unexpected expenses will pop up even if you create the most detailed plan. You may need to adjust your budget accordingly to allow for these situations. Just make sure to avoid dipping into your emergency savings unless it’s truly an emergency.
Tip 5: Revisit your budget regularly
Whilst it is important to stick to your budget, you also should keep in mind that your budget is not set in stone. You should revisit it on a regular basis to make sure that it is still working for you, and isn’t holding you back more than it should be. At the end of each month, take a look at your budget and see if there are any areas that require improvement. If you have money left over in a specific area, see if that can be allocated to another area, such as long term savings or holiday fund.
Tip 6: Take advantage of student discounts and benefits
One of the major perks of being a student is that you can take advantage of student discounts and benefits that many major retailers and businesses offer. Make sure you are aware of any discounts that may be helpful to you, but don’t buy things for the sake of using a discount. Here are a few examples:
- Student discounts: most retailers offer some sort of discount for students. These often require a valid student ID or other nationally recognised student ID scheme.
- Public transport discounts: many transport companies offer special prices for students. These might come in the form of discounted ticket prices, or the option to buy a season ticket at a lower price.
- Student bank accounts: many banks offer student bank accounts. These sometimes have no monthly fees and offer other perks.
Tip 7: Don’t be afraid to ask for help
If you are struggling with money and need some assistance, don’t be afraid to ask for help. There are resources available to students who need some financial assistance. Here are a few examples:
- Student support services: many universities have student support services that can help with financial aid, budgeting, and accessing any financial resources offered outside of the university.
- Emergency grants: some universities offer emergency grants for students who are struggling to make ends meet due to unexpected financial hardship.
- Charitable organisations: there are charities that can help to provide financial support to students in need. Where possible, do some research to see what is available in your area, or speak to someone at your student support services.
Whilst budgeting for the year at university can be a challenge, it’s a good opportunity to develop your money management skills. By having a deeper understanding of your income and expenses, setting realistic financial goals, creating a budget, then sticking to it and revisiting it regularly, taking advantage of student discounts and benefits, you can ensure that you have enough money to comfortably take you through a whole year. Good luck!
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