Budgeting helps to give you an idea of your overall financial situation and reduce any unnecessary spending, through making you more aware of exactly what you are spending and what you are getting for your money. Budgeting is a great way of minimising the possibility of getting into debt – you might even be able to save money once all of your essential bills are paid! Creating a budget plan might not be much fun, but it will help you to live within your financial means so that you potentially have more money to spend on leisure and for occasional treats.
The best place to start when compiling your budget is to work out your total income, including payments from Maintenance Loans, bursaries, and grants, as well as income from part-time employment and any parental contributions. You will then be able to split this income into weekly or monthly amounts depending upon your personal circumstances – tools like the UCAS and Which University budget calculators are useful here. It is worth remembering that loans will be paid in termly instalments, NHS bursaries monthly (except for a double-instalment to cover the first two months at the beginning of the year), and University bursaries are usually paid twice a year (in mid-March and beginning of June). It is important to be as realistic as possible and only list money that you are certain to receive in your budget.
Once you’ve calculated your income, you will need to take off your priority expenditures, such as your rent, food and other bills. You should also think about transport costs – for example, bus or train tickets, car tax, insurance and petrol – and check whether you can spread these payments out to make them manageable. The money that you have remaining can then be used for luxuries and socialising, or saved, if you’re feeling particularly thrifty!
If you do not have any money remaining after paying your essential bills then you might need to cut back on your outgoings or look at ways of maximising your income.
It’s important to be as realistic as possible when creating your budget plan and try to include any potential luxuries that you might normally buy such as magazines, meals or nights out, and coffees – these all add up!
Did you know that if you buy just one coffee every day at University, it will cost £420 per academic year?
Your budget may also vary from month to month depending upon certain bills and contract renewals coming out of your account, as well as occasions like birthdays and Christmas. Set yourself a limit for the cost of presents and put money to one side early to prepare yourself and to ensure that you can use this to be strict with yourself when you are tempted to fritter money on something that you don’t really need. It’s difficult to justify buying that must-have pair of shoes if it means not buying your best friend a birthday present!
We all have unexpected emergencies from time to time that require us to spend slightly more money than we anticipated, but if you’ve followed your budget plan properly then you should find that you’ve accumulated some savings that will be able to help you in your time of need. You can set up direct debits and standing orders for regular outgoings so that you do not miss payment dates – you might also find that this works out cheaper too. Opening a savings account for the money you’ve saved is a great idea to help you stick to your budget, you can put your loan payment in your savings and then transfer when needed. See our Student bank accounts post for further information.