The switch from living at home with your parents to living in university accommodation is probably the biggest change in your entire life. This is for many reasons, but the biggest being money. At home there is not much to worry about as bills and food and basic necessities are paid for. However, at university you wont have this privilege so it is important that you learn how to manage your money properly. It is proven that 74% of students wish they had had a better financial education before coming to uni. This alone displays the importance of budgeting in university.
Why do you need to be budgeting at university?
While it may seem boring (and rightfully so), there are so many benefits of tracking and controlling your spending. A good way of describing it is imaging your bank account is a leaky bucket. Every now and again, a tap opens to fill it up-this is your monthly income. However, the bucket is full of holes that are leaking your money. The water level will constantly be changing but as long as there’s enough water in the bucket at any one time, there’s no problem. However, there is a problem if the water level gets too low. Then you have to start plugging those holes (your spending habits). And this is where budgeting at university comes in. It helps keep the water level consistent so you can continue to spend money on the things you need and enjoy. So whether your saving up for a big spend, saving up in the unlikely event of an emergency( e.g. broken laptop), a strong budget is exactly what you need.
Calculating your student budget
You can calculate your budget in 4 easy steps:
1.) establish your income
First up, you need to work out much money you’ve got to play with. This will set the parameters of your spending, so think carefully about every possible source of revenue. Remember that your Maintenance Loan will come in three big instalments throughout the academic year, so it’s up to you to budget this out across that period.
Some common student income streams are:
- Your Maintenance Loan
- Extra money from bursaries for students
- Money from your parents
- Salary from a part-time job
- Savings.
2.) estimate your outgoings
When budgeting in university you need to figure out where all your money is going. You can either look back at your bank statement to tot up all your previous purchases or simply input a rough estimate of how much you think you spend on each category. Use data on the average student living costs as a guide to how much you could be spending.
Essential student expenses:
- Rent
- Groceries
- Bills
- Transport
- Course materials
Non-essential student expenses:
- Nights out
- Eating out
- Hobbies
- New clothes
- Gym membership
- Travel
- Hair cuts and other beauty expenses
- Subscriptions
- Gifts
3.) Calculate your weekly budget
Once you’ve got all your expenses laid out before you, it’s time to break it down into a weekly budget. Brace yourself, as this is where it starts to get real.
- Work out your total income for a term at university
- Minus your essential expenses for the same period
- Divide the number you’re left with by the number of weeks in a term.
4.) Set yourself some goals
When budgeting for university you need to follow the steps above and come out with a reasonable weekly budget, then great! But what if you’re left with a tenner to live off each week or no money at all?
Whether you need to budget to get by, or you’re trying to cut back, it’s all about setting goals to either reduce your spending or boost your income.
You may realise you’re spending £50 on takeaways each month, in which case you could try reducing it to half of that amount.
Or, if your gym membership is sucking up half of your Student Loan, then maybe it’s time to try some more creative ways of getting fit.
10 ways to make your money stretch further
- Ask yourself if you want or need things – Spend your money on the stuff you need first, and save the ‘wants’ for special occasions.
- Cut out non-essential purchases – Stop buying the everyday money-draining monsters (we’re talking coffees, takeaways…) that eat into your finances.
- Get as much Student Finance support as possible – Make sure you’re getting all the student finance that you’re entitled to, including any grants, bursaries or scholarships up for grabs.
- Set weekly allowances – Give yourself maximum spending limits for your regular outgoings, such as going out or food shopping – and stick to it. If at the end of the month, you’ve underspent in one area, you can carry that over to the next month, or use it to supplement your budget in another area for that month.
- Take out a set amount of cash – To make it easier to track your daily spending, you can take out money at the start of the week and use that instead of paying by card.
- Put away money as savings – If you can manage it, transfer some of your income into a savings account or ISA at the start of each month. Then, if you make it to the end of the month with cash to spare, squirrel that away for a longer-term spend instead of blowing it on a quick fix.
- Recycle everything – If you’re done with something, and it’s still usable, sell it on for cash or swap it for someone else. Likewise, never buy new if you can get it just as good from someone else for less. This works for clothes, furniture, textbooks, you name it.
- Switch bank accounts – Never stick with your bank account just to be loyal – loyalty doesn’t pay in this game. And some banks will even give you a cash incentive to switch.
- Get cheaper bills – Look around for deals on your bills like gas, electricity and broadband. You can often save a boat-load of cash just by switching to a cheaper supplier.
- Plan ahead – This does wonders for your bank balance. Thinking ahead applies to weekly meals, nights out and even the odd occasion when you decide to eat out. As often as possible, try to know what you’ll be doing and when so you can plan ahead and budget accordingly.
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