Learn the basics of budgeting so you can buy the things you need (and want), while saving for the future.
When you’re in school, it can be hard to balance book smarts with money smarts. But don’t worry, it doesn’t take a genius to master budgeting. Learn this key adulting skill to help take the stress off your mind—and your bank account.
A budget is a plan for how to spend your money. By looking at all of your income and expenses, you'll see how much you can afford to spend each month. If you plan well, you'll be able to set money aside for travelling or big purchases.
Why do I need a budget?
No one wants to be caught in a pinch with an empty bank account. A budget helps you stay aware of how much money you have—so you’ll have enough when you need it.
Once you start keeping track of spending, you’ll understand your habits better and can make adjustments. Spending too much at coffee shops? Try making coffee at home instead.
Budgeting will help you set aside money in case unexpected expenses come up. Plus, you can save for bigger purchases in the future.
How do I make a budget?
1. List fixed costs and estimate expenses
Make a list of everything you need to pay for each month. A spreadsheet will help you do the math and keep you organized.
Identify your fixed costs, which stay about the same each month. For example: tuition, rent, phone bills, utilities, bus pass.
Your variable expenses can change each month. For example: groceries, eating out, entertainment, clothing, household goods, gifts.
Your bank and credit card statements will help you make accurate estimates. Make sure your total expenses doesn’t exceed your monthly income.
Your income includes: your paycheque, scholarships, student loans, and any parental contributions.
Ideally, you won't need to spend every last dollar. If you have money left over, mark it in your budget as savings to set aside.
At the end of each month, compare your actual spending to your budget. Hopefully, you stayed on budget and there's not much difference between the two.
If you exceeded your budget, look at where you're going over and think about how to cut back on your expenses. You can also adjust some of your fixed costs. Try getting a better data plan or switch to a cheaper internet provider. It might take a little time to adjust your habits, but you'll get the hang of it.
If you spent less than planned, that's great! Set the money aside and consider putting it in a savings account. You can also consider adding a fixed amount of savings to your monthly budget plan.
Make sure your total expenses don’t exceed your monthly income. If you have money left over, set it aside for savings.
Tricks for staying on budget
Shop with a list
Before you go shopping, make a list of exactly what you need and double check that it will fit in your budget. When you get to the store, try not to get distracted by displays and sales on things you don't need. If you're shopping online, ignore the suggestions to add more items to your cart.
It takes a bit of discipline, but it will pay off in the end.
Having a goal in mind will give you extra motivation to stay on budget. Want brand new shoes? Dreaming of backpacking across Europe? Hoping to buy a car?
Whether it's big or small, remember your goal so you don't waste money on things that aren't important to you.