Ultimate Guide to Budgeting Your Finances as a Student
The Importance of Budgeting as a Student
College provides students with so many great opportunities, starting from spiritual growth and building healthy habits to better employment chances and new valuable connections. At the same time, college means increased responsibility for your own finances and financial sustainability. As a college student, you will need to pay tuition and other fees, buy food and books, and pay rent. That is why having an understanding and knowledge of how to create a college budget is of crucial importance for any student.
Creating a budget is important because it helps you understand where your financial resources go each month and how your spending could be optimised, so you could have some more spare money. This is the first step in learning how to manage your finances, which is always a good thing. By making your spending and saving more conscious, you can set bigger goals, including paying off your student loan debt, saving money for future endeavours, or visiting the destinations and places you have always wanted to see.
Gaining more clarity on where your money comes from and where it goes is a valuable skill that you will definitely need after college. Still, it is a good time to start tracking your financial resources during college if you want to be prepared for what is lying ahead. If you miss this opportunity while in college, it would be really challenging to develop your spending and saving habits beyond your 20s.
Personal Finances As a Student
When it comes to personal finances, many students struggle. As most students suddenly have to handle their own money, it becomes difficult for them to juggle numerous expenses. With so many expenses and course commitments to deal with, many students try to find extra sources of income or part-time jobs. Moreover, being a student in some of the largest cities in the world may be both a challenge and adventure. While the attractions of your new hometown can seem unlimited, your student loan definitely is not.
If you are wondering how to effectively manage your financial resources and make sure you do not overspend, we have got your back covered. In this article, we provide some of the most useful tips on budgeting in college. By reading this article to the end, you will know how to create a budget while in college, as well as how to plan your spending and save money as a student.
Budgeting Tips for Students
The first thing you need to do when creating a college budget is to calculate how much you spend on your daily, weekly, and monthly needs and wants. This process is presented in detail as follows.
Calculate your income
As a college student, you might have up to several income sources to help you pay for your education. For example, you may have a part-time job or internship. Your income might also come from scholarships, loans, or grants. Your parents might also pay you some pocket money, so you could afford everyday expenses.
Regardless of its source, the amount of money you get in each month forms the basis of your budget and enables you to identify how much you can spend. At this phase of creating your college student budget, you need to calculate your net income, which is the amount of money you earn minus the related income taxes.
List your daily, weekly, and monthly expenses
Having calculated your net income, it is time to list all your expenses. One common budgeting practice is to divide all your expenses into daily, weekly, and monthly spending, so you could have a clear picture of where your money goes. Some of the most common college-related expenses include groceries, travel, household goods, rent, school supplies, transportation, insurance, utilities, and subscriptions. You may also want to include a savings account in your budget to put some money for future objectives.
Although listing all daily, weekly, and monthly expenses may seem daunting or boring, this exercise is crucial for your budgeting. If you do not list your expenses, you will not be able to see what items could be adjusted or cut from the list of your expenditures.
Make distinct categories for your expenses
The next step in creating a college budget would be to categorise your expenses into fixed and variable ones.
- Fixed expenses are those that do not change from day to day or month to month and include rent, groceries, textbooks, insurance, transportation, and debt repayment.
- Unlike fixed expenses, variable expenses change in proportion, are flexible, and can be avoided. A gym membership, dining out, travelling, and entertainment purchases can all be attributed to variable expenses.
Since fixed expenses cannot be changed and you have to pay them no matter what, you will need to reduce your variable expenses if your income decreases or you want to save some money for other purposes. However, as you will read further in this article, there are plenty of ways to save your money without the need to cancel your gym membership or significantly reduce your takeout spending.
List how much you spend on each category
Now that you have categorised your expenses, you need to calculate how much you spend on each category. As a result, you will see where most of your money goes. If your variable expenses are higher than fixed ones, then you will have a certain degree of flexibility when deciding how your budget could be adjusted. If not – don’t panic! Some useful solutions that you could adopt in order to achieve your money goals are presented further in this article.
Once you have organised your spending, add all your expenses together and subtract that number from your net income. Now have a look at the result. The negative final number indicates that you are spending more money than you make, which is not very effective from a financial standpoint. Concurrently, the positive final number means that you have extra money to put towards your savings or spending.
Adjust your budgeting
Having enough money to cover all your costs is great. However, what should you do if your monthly expenses exceed the amount of money you make each month? If you do not consider ways to make more money, then you should probably make some adjustments to your budget. The most obvious thing you could do in this situation is to reduce the amount of money spent on your variable expenses. For instance, you could cut some of your streaming subscriptions or limit takeout orders.
If you are spending more than you earn, you could stick to the 50/30/20 budget rule, which allows you to split your net income into three groups of spending, namely 50% on what you need, 30% on what you want, and 20% on savings. By following this simple rule, you can more effectively manage your after-tax income and have some money on hand for emergencies. Considering the current level of uncertainty and unpredictability, creating an emergency fund can make a world of difference when you have to pay an unforeseen monetary cost.
Top 10 Student Money Tips and Budget Hacks
Adjusting your college budget is likely to give you a clear picture of how you could stay on track and hold yourself accountable. However, if the calculations indicate that there is little flexibility in what could be cut out from your expenditures and you cannot afford your lifestyle, you are not alone. We all know the money issues involved with being a student. We know because we’ve been there too. That’s why we’ve put together some amazing budgeting tips for students to help them budget, save, and spend wisely.
1. Look for discounts and coupons
Being a student means you are entitled to several discounts and coupons. Be it movie tickets, shopping at the supermarket, using public transport or shopping online from your favourite brands. Just keep your student ID handy to present it at the checkout and avail your discount. These things are perfect to stock up on so that you can use your money elsewhere.
It goes without saying that these were invented for marketing purposes, but if you can stop at the right moment, they may become a source of saving for students. There are specialised sites that gather information on discounts for students, and you can receive updates from them.
For example, many grocery stores provide digital coupons that allow for buying certain goods at a high discount. Make sure to clip these coupons ahead of time when you go shopping. You could also opt for store-brand products instead of name-brand items to save some extra money.
2. Make use of freebies
Many students simply don’t realise how much you can save by being a student. Whether it’s a % discount in your favourite store or a free cheeseburger at McDonalds. Check with staff about student discounts everywhere you shop. If an online retailer doesn’t do student discounts, have a look on google for other discounts or vouchers they might have running before you hit the checkout button.
Universities often offer their students free access to libraries, student clubs, campus entertainment and health and wellness services. If you want to get entertained for free, keep a check on pop-up stalls to get free invites to music concerts, festivals or carnivals.
3. Check out for scholarships
Scholarships are a great way to cover your study costs at the university. Check out which scholarships are available in your university and which ones you might be eligible for. Apart from universities, different non-profit groups and communities also offer scholarships to university students.
The good news is that in many jurisdictions, there is no limit to how much scholarship aid you can get. It is even possible to win enough scholarship money to pay nothing for college from your own funds. Another great thing about scholarships is that you can apply for as many of them as you like. You can find scholarship apps on the internet that would instantly match your accomplishments, interests, and traits up to the available scholarships in your country.
4. Cook your own food
Ordering or taking away food from outside can be very heavy on your pocket. So, cook your food and try to avoid the temptation of ordering food from your favourite fast-food joint. Also, preparing food in bulk which can last for a week will help you save time and money.
If you have a freezer at home or at your student accommodation, this method can help save money off your food shopping. Nearly all big supermarkets have a reduced section, where food can be bought for a small fraction of their original cost as the best-before date is fast approaching. Buy food like ready meals and other refrigerated snacks and freeze them when you get home. That way you save money, and they last longer. Note: the best time to shop for reduced products is after 6 pm on weekdays.
5. Buy second-hand books
As a student, you might be sick of spending a fortune on pricey books each year for all your modules. Rather than shelling cash on the latest edition of books, check out online marketplaces where you can get used books at the most affordable rates. While unsure of working on your assignments, take help from professional writers who offer reasonable and reliable essay writing and dissertation writing services.
Another way to save some money on textbooks for college is to purchase second-hand books in charity shops near your university. These shops often receive tons of cheap textbooks, so you should definitely check them out. Former students can also sell you the exact texts you need because they are likely to be keen to get rid of unnecessary books as soon as possible.
6. Ditch nightclubs for house parties
The COVID-19 pandemic has dramatically changed the way students hang out and spend time with peers. Although social distancing and lockdown measures are still in place in some countries, these restrictions are slowly but steadily becoming less severe and tight.
Even if the fallout of the coronavirus pandemic is put aside, visiting a fancy restaurant or a nightclub with your friends might not be the best idea when it comes to saving money. Instead, take turns to host house parties where everyone can bring their food and drinks to share. While ordering food together make sure everyone pays their share so none of you feels broke at the end of the party.
7. Unsubscribe from small direct debits
Today, many useful services require a paid subscription. We easily activate them because several pounds a month don’t seem a big deal. But what if you have stopped using a service, but they still keep charging you? In our digitalised world, you need to check out many: Apple Music, Dropbox, Evernote, Spotify, etc. Subscription fees to things like Apps, Spotify, Netflix or magazines may seem small in the grand scheme of things, but they can quickly add up.
Your inspection will reveal that you might be spending hundreds of pounds on online services annually. A wise solution would be to find free or cheaper alternatives (e.g. Google Keep instead of Evernote). Alternatively, cancelling subscriptions to services you no longer use can make a nice difference to your budget each month.
8. Track your expenses
Depending on your country of residence, download an app like Penny, Wallaby or Level Money to your smartphone to track expenses on a daily basis. In 2-3 months, you will see where money is spent ineffectively, and several ‘black holes’ in your budget can be avoided. Most people who start tracking their expenses get sincerely surprised when they see where their money is really going. Of course, these apps are free; otherwise, it would be your first expense record.
9. Prefer cash, not plastic
Have you ever noticed that when paying by card, it is emotionally much easier to part with your money? You don’t lose any physical objects (i.e. banknotes and coins), and only numbers are withdrawn from your account balance. With PayPass and PayWave technologies, you don’t even have to open your purse. Using cash may prevent you from impulse and ‘easy’ purchases. If cash is a nightmare for you, at least set expense limits on your online banking setup, or issue a card with a cashback.
10. Use social engineering
In the words of Warren Buffett, “buy when everyone else is selling”. At the end of the term, many students move back home or change their places of residence. This is the best time for you to group offerings by area and start hunting for accommodation options. Remember that spending more time at this stage can save you a lot of time and money in the future. You can also improve your accommodation standards by renting a nicer place with two or three fellow students. You can also buy used books from those students who have finished the course.
The Power of a ‘No-Spend’ Day
While the aforementioned tips and suggestions can enable you to save some money, they still imply purchasing certain things and services. However, you could approach the budgeting issue more radically and start a habit of spending no money at all on certain days.
At the most basic level, you could dedicate one day of the week to “no spending”. Whether you’re planning to stay at home that day anyway, or if you are out and about, try to commit to not spending any money on that day. The rules are simple: you do not use credit cards; you do not use cash; you do not pay for anything using any payment method. If you can easily handle this task and feel like there is still capacity, you could make two or even three no-spend days per week.
This challenge could be difficult, especially when there are so many ways we can spend our money. We can buy goods without having to go outside, which makes us purchase things we do not actually need. There is always something on sale! Moreover, after a long day full of stress, we often feel the urge to eat out or go for a drink, which not only results in increased spending but can also have a negative impact on our health. By saying no to such spending habits, you can find healthier ways to deal with stress.
You should remember that any day when you do not spend your limited financial resources is a day you save money. If you can avoid purchasing unnecessary things and services, such as lunch and coffee out or buying goods online, you will be able to repay your student debt much faster. Alternatively, you could bulk up your savings and manage them wisely. While committing not to spend money on things you do not really need is a good way to kickstart a saving goal, doing a no-spend day challenge requires following certain steps. Here is what they are.
Schedule your no-spend day challenge
As mentioned above, there are no restrictions on how many days per week or month you can challenge yourself. If you feel potential, you can easily extend the challenge for several days or several months. From our experience, doing one no-spend day is an easy task but things become hard if you are doing this for a week. Just make sure the length of your challenge is doable before actually doing it.
Prepare in advance
Having scheduled your no-spend day challenge, you will need necessities, including groceries, frozen meals, kitchen items, and toiletries. If some of these necessities are running low, you should buy them before you start the challenge. By doing so, you will avoid the temptation to buy things while you are in the middle of the no-spend day challenge.
Break the consumer’s mindset
This comes as a side effect because once you have consciously decided not to spend any money on unnecessary things, you are likely to learn how to think outside of the box. Your brain will learn how to find alternatives to spending, which, in turn, can alter your entire financial outlook.
Establish saving goals
In most cases, the purpose of the no-spend day challenge is to save some money and change your spending habits. Just remember that your saving goals must be realistic to propel you forward.
Track your progress
Tracking your progress is key to success. You should track the money you are saving on a no-spend day worksheet that you can create yourself with the help of your ordinary word processor or by downloading a free printable from the internet.