- 24 Sep 2021
- Reading time
- 5 minutes
Student life is the first stage in life that requires proper budget planning. Budgeting may seem daunting, but all you need to do is have a few hours to analyze expenses and be organized. To simplify this task, we have compiled a step-by-step budgeting guide that will allow you not to go broke.
Determine Budgeting Time Interval
You can create a weekly, monthly, or annual budget. If you are building a college career, we recommend making a monthly budget for an academic semester. In this case, remember that your income can vary from month to month, and costs may differ. For example, in September, insurance books require large expenditures. Also, you will spend more money than usual in the autumn and winter period because you will have to pay for heating. Therefore, take these features into account to understand which month costs more.
Find a Budget Management Tool
Instead of jotting down all your expenses and income in a paper pad every time, find a smart tool. For example, you can use an automated spreadsheet, online or offline applications, Telegram bots, etc. Many banks offer users budget management tools within online banking programs. We can recommend the FACT app for managing all your money as it is free - the ideal option for a student. Here, you can find tips on budget control, avoiding defaults, or getting financial aid. In addition, FACT offers loan advice and provides feedback on your financial obligations. Therefore, you can be financially educated.
Examine Your Monthly Income
Find out how much money you get every month. Here are some tips for researching income:
• The primary sources of income are work, financial contributions, family support or scholarships, grants. If you receive money from several sources, calculate the total and output the monthly income.
• If you provide academic assistance to students when they tell you “write my paper” determine how many assignments you are doing and how much money it brings.
• For those students who work in the summer and this is their main source of income, we recommend dividing it by 12 months and thus working out the monthly amount.
For automated calculations, use budget calculators. With the help of such programs, you cannot get confused about the numbers and accurately determine the monthly income.
Classify Your Expenses
To determine the monthly expenses, you must understand how you spend your money each month. Keep your receipts and card statements to decide on your monthly expense accurately. Thanks to this method, you will be able to understand which harmful spending habits are wasting your budget and will be able to manage them properly. Once you've identified your costs, you need to classify them into two categories:
• Fixed costs. These are expenses that are allocated the same each month. For example, it can be expenses for rental housing, mortgage payments, insurance. You cannot reduce these costs. However, you can save money if you find cheaper accommodation. Based on these indicators, determine how much money you need to leave for such expenses. For example, your insurance costs $ 1200 per year. Hence you will need to debug $ 100 every month.
• Variable expenses. These are costs that can differ from month to month. This includes fees for food, clothing, entertainment and travel. Try to estimate how much money you are spending on these items and determine if they ruin your budget. If you understand that you can refuse some entertainment, do it to not sit hungry at the end of the month.
If you have other expenses that do not fit into these categories, please add them.
Include In Budget Unexpected Situations
Why is it worth having a reserve of money? Unforeseen situations may await you - illness, injury, etc. Your savings will be an excellent lifeline for solving such problems. Moreover, having a reserve of money, you can cover the expenses several months in advance if you lose your job. Therefore, calculate how much money you need to set aside each month in reserve.
Balance Your Budget
Now that you know your monthly or annual income and expenses, you can compare them to balance your budget. For example, your monthly income is $ 1000, and your expenses are $ 950. If you see that costs do not exceed income, this will be a positive balance. That is, you earn more than you spend.
At the same time, you do not need to look for new ways to spend money to exhaust your income entirely. Invest money instead, or save it for big purchases like a car or a house. Also, if you have a positive balance but have a student loan, why not pay more than the monthly installment indicated by the bank? So you can close the loan faster and increase your income.
If you see expenses exceeding income, it will be a negative balance. In this case, you need to balance the budget to at least the same level of income and expenses. To balance the budget, you can revisit your variable costs and figure out which one needs to be cut, or you can find new ways to increase income.
Spending less is more accessible than earning more, as full-time employment can hurt your academic performance. For example, you cannot dine in the dining room but cook yourself; you cannot buy books and download them electronically. Use the grocery shopping list to avoid over-buying. There are many options for saving - the main thing is to find a balance.
Observe And Update Your Budget
Once you have a budget, update it from time to time and stick to it. Here are some tips to help you with these tasks:
• Review your budget every month. Regularly reviewing expenses and income will help you identify holes in your budget and fix the problem on time.
• Control purchases. Many of us buy things on impulse. Every time you see a beautiful thing, say to yourself, "Do I need this?" If you understand that you can do without this thing, refuse to purchase it.
Budget planning helps and prepare students for the unexpected. Stick to budget goals so that in the future, you do not worry about the fact that you will not be able to pay rent for apartments, studies, personal needs, etc.