It’s a great feeling at the start of term, when that giant cascade of money magically appears in the form of loans and funding.
If you found yourself struggling at the end of last term, that massive accumulation of riches can feel like coming up for air. Much as this may feel like a fine time to restart the cycle and go on an outrageous spending binge, this is actually a perfect opportunity to organise your budget so you can relax, not only when you get that money but more importantly feel just as composed and comfortable when the term comes to a close. Rather than see this as party pooping, I’m hoping I can frame these strategies in a way that can demonstrate to you that this is a positive thing that could potentially make you a better person. So let’s get started!
Part One- Calculation
Writing up your budget does sound like a bit of a drag, but like most things in life, once you’ve got through this initial stressful part, you’ll probably warm to the idea.
Basically, you’re making a list to track what money you have coming in and what you’re spending, then checking how they balance. So let’s look at some ways to develop your budget strategy. There are four steps, so grab a piece of paper and a calculator.
1. Think what available money you have. Consider your loans, grants, income from jobs and any other pocket money you may have coming in.
2. Tell your parents you’re working out a budget. This will be music to their ears, but more importantly, they may know more about what your income is than you do and will be really happy to help you out.
3. What are your costs going to be? There are two categories here, let’s call them ‘business’ and ‘pleasure’. Business, think costs for course materials (think books etc), travel to and from college and what you have for lunch every day. Pleasure, here you’re thinking about food shopping, nights out, takeaways and other indulgences such as beer. More about this in the next step…
4. Get all this information into a folder, so it’s all organised and ready to check.
Obviously, very few of us keep hold of receipts these days, so I find the most accurate way to access this information is to use statements from your online bank account. Frustratingly these tend to log you out after five minutes of inactivity, so it makes sense to make a printout to work from. It will also be useful to keep these in the folder and if you get paper statements, even better, get some poly pockets and keep them all together (not just piled up still in their envelopes on your bedroom floor!)
Use your brain to think through the last couple of weeks and write down what the statements aren’t telling you, like stuff you may have bought using cash, then estimate these outgoings and add them to your total.
Working this out in weekly chunks will be really helpful. It makes it more manageable, what with university campuses and landlords typically advertising rent on a weekly basis despite the fact you pay it monthly.
Also, don’t forget money you may be spending during the holidays. This is generally less than you’d spend in a normal week so half terms can be a welcome passage if you intend to make an annual budget.
Part Two- using the data
Now you have all your data, it’s time to work out what it all means. This is Money.co.uk have a very simple Budget Calculator, which is perfect if you’re new to budgeting. Feed in the information you’ve worked out and let it calculate how your weekly budget is shaping up.
Chances are, if you ended last term in debt, this calculation will come up as negative. So you have to have a look at ways you can reduce outgoings.
Some useful questions are ‘where can I cut costs?’ and ‘what outgoings are unnecessary?’ Be sure to write down any ideas you have. Could you start shopping in Aldi or Lidl instead of Waitrose or Sainsbury’s? Could you use public transport or bicycle instead of your car? Work out how these changes will impact the budget and jot them down.
You may have noticed that the main focus of part two is making well considered decisions in order to minimise unnecessary spending. This takes some commitment to the cause, but don’t feel down about it, it’s all part of adapting to the real world and will put you in a good position to potentially conquer it.
You could even think ahead a year by considering reducing your heating bills next winter. Just remember, the budget you have written is an ongoing balancing act, meaning it is supposed to be tweaked when necessary.
To finish off here are 4 useful tips to keep on top of the budgeting habit.
1- Put a Cap on Luxuries
Put a weekly cap on things like the last three luxuries in the ‘pleasure’ list. If you can’t remember how much you spent on beer last week that may be a really good place to start!
2- Increase Income Where Possible
Keep an eye open for various income boosting schemes. Some of these, like mystery shopping in restaurants can be potential social occasions, and so long as you have some music playing even paid surveys can be quite enjoyable, so check this page of student money making tips.
3- Don’t be a Sheep
Being a student gives you so many opportunities to show your independence and not be a pack animal. In my experience, money matters are the main area where you can exercise this character trait and develop into someone who can deal with any problem life throws at you.
If people are flashing cash around, they are unlikely to be demonstrating that they are richer than everyone else, just boasting that they don’t care. If this is the case they’re exposing some real insecurity, which also suggests it is quite likely that there are a lot of people in attendance who they are trying to impress. This is where you can be the one with the confidence to say you’re having a good enough evening and aren’t into laying more money down. There are bound to be other people who will be pleased that you said it first, and you’ll be respected for your maturity.
4- Value the Cheaper Side of life
There are always ways to cut money, sometimes simple things like clothes shopping can become quite a good place to develop strategies that work.
Learn to enjoy cutting corners and finding ways to make things cheaper, look in charity shops whenever you’re passing by and find out which ones have the best bargains. Get involved with Gumtree and Freecycle, and discover the joy of randomly finding new clothes and other essentials that would have cost a lot more from a high street shop. These items are generally a lot more exciting to stumbled upon in the friendly world of public sharing.