You’ve just been accepted into an amazing university and you’re preparing for the next major step in your life. But with tuition fees and living expenses on the rise, you know getting in is only half the battle. The other half is paying for it.
The best way to start is by making a personal budget and incorporating it into your daily life. “Most people do some form of budgeting without knowing it,” says Ryan Alexander, Certified Financial Planner at Sun Life. He says, “An example of this is when you go shopping with your friends, pick something up and pause to ask yourself, ‘Do I want to spend my money on this?’”
“Learning how to budget in university will help you know how to keep track of your finances in the future,” says Alexander. “Plus, knowing how much money you have coming in and where your money is going will help you to pay off your student loans faster once you finish school and start working.”
Davina Zahra, a Commerce student at Queen’s University knows this all too well. She says, “I knew I had to stop spending money on brand names if I was going to be able to afford to live on my own during school. I also started splitting each of my paycheques into two: 50% for leisure and 50% for living expenses to make sure my spending fit into my budget for the year.”
Six more easy steps to follow to help you create a foolproof student budget:
Step 1: Set financial goals and prioritize them
Make a list of goals and divide them into three categories: immediate, short-term and long-term. For example, paying rent on time can be an immediate goal, saving for a new outfit can be a short-term goal, and graduating with $7,000 in student loans can be a long-term goal.
Step 2: Estimate your income for the year
Ask your family how much they can contribute to your education. Then, figure out how much you will save while working during the summer and if you will work part-time when school starts. Don’t forget to apply for scholarships, bursaries and government assistance and to research your line-of-credit options.
Step 3: Add up your “fixed costs” for the year
Fixed costs are necessary expenses you cannot do without, such as tuition fees, books, rent, monthly utilities and insurance. You should be able to obtain some of this information through your university registrar’s office or website. If you are in first year, consider the costs of your residence and meal plan as “fixed” for the year.
Step 4: Add up your “variable costs” for the year
Variable costs are additional expenses, such as groceries, school supplies and entertainment. If you don’t know how much money you’re likely to spend, try keeping a journal and logging all of your purchases for a few weeks.
Step 5: Calculate the difference
Once you’ve added up your fixed and variable expenses, subtract them from your total income. If the amount is positive, your finances are in good shape. If the amount is negative, you’ll need to either find extra sources of funding or cut back on your variable costs.
Step 6: Review and adjust monthly
Post your budget in a visible spot and refer back to it on a monthly basis, especially if you’re considering a large purchase or if your income changes. Also, record your rent, cell phone, tuition and utility payment due dates in a calendar to help ensure you don’t miss a payment.