Budgeting at University
Put simply, a budget is a plan that shows predicted expenses and income to help you work out your disposable income / how much you’re overspending.
Why Budget?
Budgeting is essential not just in University, but will be important throughout your entire adult life. In order to stay out of debt, the very first thing you need to do is create a budget. I cannot stress enough the importance of seizing control of your personal finances. Don’t fool yourself into thinking that budgeting is only for multi-million pound companies. Everyone should budget. Without a budget, it’s unbelievably easy to get into debt, so please don’t make the mistake that haunts so many graduates.
How do I Budget?
Okay, now that you’ve hopefully decided that you want to create a budget - but how do you do it? Well, creating a budget is easier than you might think. You do not need any fancy software; you just need a piece of paper, a pen and commitment to stick with it. Alternatively, you can use Microsoft Excel or another spreadsheet program, which most computers come with pre-installed.
If you do have Microsoft Excel, I’ve created a budgeting spreadsheet for you to use if needed. To download, right click and then select ‘save as’ on whichever spreadsheet is needed for your version of Excel.
Although I’m providing you with a spreadsheet, you should still learn how to budget independently. It’s a very simple 3-step process.
1 – Create a full list of your income/expenses
Income – This includes any money you have coming in – tuition fee loans, maintenance loans, your job, your allowance, etc. You need to have a full list of where all your money is coming from. This is essential so that you can see whether you have enough money to cover your expenses.
Expenses – Ideally, you should break your expenses down into necessities and luxuries. For example, your tuition fees and accommodation fees are essential – you have to pay them. However, you (arguably) do not have to spend hundreds of pounds getting new clothes if your old ones are fine. One important thing to remember is not to lie to yourself – overestimate your expenses. It’s better to over budget and have money left over, than to underestimate and have to get into debt. Also, remember to be honest with yourself. So if you spend £20 a week on chocolate and feel guilty about it – you should still account for it in your expenses!
Also, it’s essential to account some money for the unknown. You may have forgotten about a particular expense, and when that creeps up on you, you will want to have enough money to cover it.
2 – Work out your total income / expenses
Once you’ve written down and made accurate estimates on your income / expenses, you’ll need to add then up to work out your total income / expenses. You will then need to calculate the difference between your income and expenses, to see if you’ll be overspending, or if you’ll have disposable income. You can go a step further and work out the different between your necessary expenses and your income.
3 – Make adjustments if necessary
If your expenses are higher than your income – then you have a problem. You are going to get yourself into a lot of debt if you go through university like this. If you have this problem, you will need to cut down your expenses. The first thing you should do is lower your spending on luxuries. Once you’ve done this, see if you can cut the cost of your necessities somehow.
If you still have a problem and don’t know what to do, then I recommend that you go and speak to someone who is familiar with your financial situation in order to improve your budget / cut your costs.
Congratulations, once you’ve done this – you’re done. Were you expecting something a little more challenging? My apologies – it really is that simple!
If it’s that easy, why do some students not bother?
One word; laziness. Long story short – if you decide not to listen to my advice about budgeting, don’t graduate University up to your eyeballs in debt and then wonder why/what went wrong.
Anyway, that’s enough of the doom and gloom – be sensible (with your finances at least) and you’ll have a fantastic time at University.
