Money Matters

Budgeting 101

By Feb 21, 2014 No Comments

If you struggle to live on a tight budget, don’t worry – most students deal with the same problem. It’s just a part of life until you graduate and enter the world of work.

Learning how to budget is the key to reducing financial stress, however. With this guide, you can get into the habit of living frugally for the next couple of years.

Work out your monthly income
Add together any money you get from your parents, scholarship or bursary funds, student loan (monthly) and your salary or wages if you work a student job. You probably don’t earn enough to pay tax, but if you do, subtract the amount you’ll pay in taxes. If your income varies a lot each month, you could start by writing down your weekly income and then working out a monthly average.

Write down your expenses
It helps to break these into different categories, for example your medical bills, clothes, weekly night out with friends, groceries, transport, gym and so on. You have to be able to identify your spending habits before you can change them. Click here for a sample income and expenses worksheet.

Compare your monthly income with your expenses
If you get a negative number, you’re spending too much and have to cut back. If there is still money left over, divide it into groups, such as, savings, flex money (for emergencies) and spending money (for fun things)

Set and stick to spending goals
Commit to not spending more than a certain amount of money each month (or week). If you find you keep going over budget and you’re not sure why, try keeping a spending diary, and write down everything you spend money on. Once you know where your money’s going, you can decide where you’d like to cut back. If you usually eat out, for example, learn how to cook for yourself at home – you’ll save loads of money this way.

It may take a while to get used to living this way, but trust us, it helps. You’ll be a happier person with a better sense of financial security, and it will set you on the path to financial freedom in your future.

photo credit: kenteegardin via photopin cc

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