Getting Smart about Budgets

Now is the perfect time to figure out how to make your money work for you. It might seem like a chore, but it will definitely pay off in the long run.

Learn how to make a budget - and stick to it - with these useful tips and resources.

Doing the math

Setting a budget involves allocating a fixed amount of money to spend per month. To do this, you'll have to add up your monthly income and expenses for the entire school year.

There are many online tools and calculators to help you with this (See the Related Links box for some handy CIBC tools).

It's always a good idea to start a budget in the fall, when you have a clear idea where your money is coming from and how much you'll receive. Identify all your sources of income (including summer earnings, student loans or part-time jobs) and when you expect to receive the funds.

Here are some tips to help you create an accurate budget:

Determine your fixed costs, such as tuition, rent and utilities.
Estimate variable expenses, such as food, laundry, clothing and entertainment.
Don't overlook one-time expenses, such as trips home, gifts, books and course materials.
Include your "small" expenses, including coffees, snacks and magazines. They add up!

Working with the numbers

After you've listed your planned expenses, take a week or two and record every penny you spend.

Track your purchases in a notebook.
Keep all your receipts and add them up at the end of the week.
Go back and compare your expenses to your income and decide how much you can actually afford.

If you're spending more than your income, something will have to change. Likely, that means trimming some expenses.

Cutting corners is easier when you know your weak spots. For example: If you buy a $3 coffee and snack three times a week, that's about $300 for the school year. Can you afford that? You won't know unless you do the math.

Keeping it current

Here are some useful strategies to keep yourself in check throughout the school year:

Stay on top of your budget. Compare your results with your budgeted estimates every month. If your actual spending doesn't match up with your planned expenses, make adjustments as needed.
Try to find ways to keep within your expense target. Track your spending online and use your monthly bank statements to cross-reference with your own receipts.

Remember, you're just learning how to do this, so don't expect perfection yet. Juggling finances is a tricky job that takes time and effort to master.

Reaping the rewards

Making a budget and sticking to it is the foundation of good financial planning. It helps you stay in control of your finances, no matter how big or small.

Although it takes time and discipline, you'll be thankful when April rolls around and you've managed to make September's money last until your final exam. You just might be able squeeze in a special end-of-year celebration!

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The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual.