Whether you’re in high school, post-secondary school, graduate school, or are entering the workplace, learning how to create and manage a budget is an essential skill. This will help you manage any student debt you may have, pay for tuition, and differentiate between necessary and desired purchases. If you’re just starting on this adventure, a budget can seem intimidating and confusing. But don’t worry — managing your money can be simple if you follow these tips and tricks. You’ll learn how to track your expenses, control your spending, and save your money in no time.
Where do I begin?
Creating a budget can seem like a daunting task, and knowing where to start can be difficult. Follow these simple steps to create a budget and manage your money.
Step one: Determine your income
Your income is how much money you make. This can come from working part-time, scholarships and financial aid, parental contributions, babysitting, and more. Basically, any time you’re given money can be considered income. Start by making a list of how much money you’ll earn each month. Differentiate which income is consistent, and reliable like your paycheques, versus one-time payments like a scholarship or babysitting gig. This will help you know how much money you’ll have for sure each month and how much you may also earn occasionally.
Step two: Track your spending
Keeping track of your money each month isn’t something you can do by memory. You’ll need to keep a record of your purchases to simplify this process. Some common ways people keep track of their spending is with excel, word, or google docs. There are also budgeting apps like Goodbudget, You Need a Budget, and Mint. Use whatever method works best for you — even if it’s your notes app on your phone — but this is where you’ll be keeping track of your daily purchases each month. Write down each time you spend your money, how much you spent, and where.
Step three: Differentiate between your “wants” and “needs”
Once you begin tracking your spending, at the end of each month you’ll have a better idea of where you’re spending your money. Using this information, you’ll be able to determine which purchases are necessary versus which ones are more of a “want.” Some necessary expenses may include things like rent, tuition, gas, utilities, a phone bill, groceries, loan payments, and more. Whereas a desired purchase is something like take-out, Starbucks, drinks at a bar, etc. These “wants” are where you’ll cut back on spending if needed.
Okay, I’ve done all that. Now what?
Now, using the information and tracking you’ve compiled, you’re able to create your basic budget. Each month you’ll make a note of how much income you’ll earn. Then, you’ll determine which expenses you’ll need to pay for the month (tuition, rent, phone, etc.), and subtract that amount from your income. Hopefully, you should have some money left over. For example, if you make $2,000 from your serving job this month and your phone bill, rent, gas, etc. cost $950, then you’ll have $1,050 left over. Any extra money that’s left over can either be saved or used to spend on those “want” expenses like take-out. Check out this basic budget template to see how easy budgeting can be!
It’s good to get into the habit of setting aside some money for savings while you can. If you’re in the negative after your necessary expenses, then you’ll want to re-evaluate your spending to see if there are any other expenses you could minimize. You can also consider finding more forms of income to offset these costs. Check out some of these popular side hustle ideas for students.
Tips for saving money
If you find that you’re spending a bit too much each month, then try some of these tips to help you save money:
- Look into a cheaper phone plan
- Use your school gym as opposed to a gym membership
- Take public transportation instead of driving everywhere
- Use coupons and fliers when grocery shopping
- Meal plan for the week to limit take-out
- Use your student discount at stores
- Buy used textbooks and sell your old ones
- Round up your purchases to the nearest dollar and set aside the remaining coins. If you buy a coffee at $4.15, toss .85 cents into your savings account — or find an app to do it for you — as if you spent $5.
How to stick to your budget
So, now that you’ve got a budget, the tough part is sticking to it. Follow these common practices to ensure you stay within your limits:
- Review your budget at least twice a month: once at the beginning and once at the end
- Take the time to record all your purchases
- Try a no-spend challenge (ex. avoid cafés and make all your coffees at home)
- Sleep on big purchases. If what you’re buying is not something you absolutely need, take a few days to think about it
- Stick to your grocery lists! We all know that the snacks and goodies in the aisles are tempting, but this can add up quickly
- Be realistic with how much you spend. You don’t want to budget $100 for groceries if you actually spend $200
- Plan ahead for months you know will cost more. It’s hard finding motivation to cook during exam season, so plan ahead and set aside some money for take-out when you need it
There you have it! Your very own guide to creating your basic budget and sticking to it! Budgeting doesn’t have to be as intimidating or challenging as you may think. The main point is to be more mindful of your spending and discover which tricks help you save money.
Learn more about making your budget