While making a budget can seem really complicated and intense, especially to students just starting out in University, it’s really not. In fact, it’s a lot more simple than you think. To formulate a budget, you only need to incorporate three things: income, expenses, and savings. That’s it. Income minus expenses equals savings. You’ll have to customize it to your own situation, and your short-term and long-term financial goals, but to formulate an effective budget, you will always follow this simple formula.
1. Income
Your income is any money that you are earning, whether that be from scholarships, grants, bursaries, your parents/guardians, or a part-time job. To set up your budget, it might be easier to figure out what your income is per semester, then divide that by the length of the semester to figure out what your monthly income is. This is the number that you will start with. If you’re looking to increase your income, consider looking into odd jobs like blogging, freelancing, or writing that can be additional ways to open up a new stream of income.
2. Expenses
Expenses are anything on which you spend money on. This category can be split up into two groups: essential expenses and non-essential expenses. For University students, the essential expenses are fairly standard: tuition, rent, textbooks, food, and transportation. Non-essential expenses, including clothes and eating out should be very carefully considered and incorporated into your budget.
3. Savings
This category is arguably one of the most important ones to ensure financial success in the future. Saving money while in school will help minimize student debt, and will provide you with some sort of safety net for emergencies. Even if after you graduate, all your savings will go towards repaying student debt, you’re already making massive strides in the right direction to become financially independent. Not spending all of your money on non-essential expenses will really help you out long-term, and even the smallest amount of savings will add up and be beneficial in the long-term.
After you have your income and expenses calculated, it’s time for you to put together your own budget. You can do this using a Google Spreadsheet, or you could write it out on a piece of paper. Personally, I’ve found budgeting apps a lot more convenient and easy to use, as you can link up your Credit and Debit cards to the app. Mint is an example of one of these apps. This popular budgeting app is completely free and can sync with your accounts, and there is a feature that will let you track your credit score free. Another budgeting app comparable to Mint is PocketGuard, however, PocketGuard is available for IOS only and does not have the credit score tracking feature.
At the end of the day, it doesn't matter what you use to track your budget, as long as it works for you. Setting up a budget is one of those things that seems restricting and unnecessary, but you will honestly thank yourself for being responsible with your money long-term. Exercising a bit of willpower and employing the use of delayed gratification is all you need to start yourself on a path from University to financial independence.