Whether you’ve gone into college straight out of school or you are heading back to education after a break, one of the most daunting prospects, right up there with learning and preparing for exams, is managing your finances. Higher education is typically a worthwhile expense, but there’s no getting away from the fact that degrees and other qualifications are expensive. Studying can also take up a lot of your time and limit your chances to earn money. It’s no surprise that most students are still paying off student debts well into their working lives. In fact, it’s thought that around 7% of students never pay back their loans.
If you want to graduate without mountains of debt that will affect your disposable income for years to come, it’s important that you budget throughout your studies. Below, we’ll take a look at why you need to budget, how to do it, and ways to increase income and decrease outgoings to make your budget more manageable and reduce debt.
Why is sticking to a budget so important for students?
As a student, it’s so easy to overspend, especially if it’s the first time you are living away from home and having to deal with things like housing expenses. With huge expenses like housing and tuition costs hanging over you, it can be so hard to manage your finances. More students than ever are turning to things like payday loans and leaving their studies with huge amounts of debt.
This debt can make it difficult to relocate for work after graduation; it can make it harder to buy a home later on in life and it can affect your credit score for years to come, making any financial commitments more difficult. Sticking to a budget helps you to avoid debt as you study, but also to start life as a graduate on the right foot and develop a healthy relationship with money, which can set you up for life.
1. Create a Manageable Budget
If you are going to budget while you are studying, you need to actually create a budget. One huge mistake that people make here is being unrealistic with their income and expenditure or missing things off that they don’t think are important. When it comes to creating a budget, you need to be honest and realistic; otherwise, you are wasting your time at best and at worst setting yourself up to fail.
Sit down with a pen and paper, or an Excel spreadsheet, and all of your bank statements to work out your budget.
Income:
We’ll look at some ways to increase your income below, but it would usually include things like student loans or finance, money from paid work, the money you’ll earn on work placements, savings you have access to, money from family, and any scholarship payments that you might be entitled to.
Outgoings – Essentials or Fixed:
Fixed outgoings are the essential expenses that you have to pay, which will typically be the same every month. These are the expenses that most people will remember to include in their budget. Your fixed expenses might include things like rent, utilities, tuition fees, course materials, and cell phone costs. Some of your essential costs, such as groceries and travel, might not be fixed, so you’ll need to work out an average or estimate to include in your budget. If in doubt, overestimate; it’s better to have more spare cash than you expected, not less.
Outgoings – Non-Essentials:
Your non-essential outgoings can be either fixed or variable (in which case, create an estimate again), but a lot of them can be cut or reduced. We’ll look at some ways to reduce expenses below too. Include things like subscriptions, nights out, eating out, gym memberships, clothes, and anything that you spend on hobbies. This section should include absolutely everything that you spend money on, even if it’s an infrequent expense.
Calculate Your Budget:
Now you’ve written everything down, you can work out your weekly income and essential expenditures. Whatever is leftover can be used for non-essentials. Having things written down in front of you will help you see where you spend money, ways to make easy savings, and give you an idea of whether or not you can afford all of those non-essentials that you’ve included. If not, you either need to find ways to save or cut some of your luxuries.
So now that you’ve got your budget, it’s time to make more, spend less, save some, and start making managing your finances less distressing.
2. Make Sure You are Getting Any Financial Assistance You are Entitled To
As a student, you might be eligible for more financial assistance than you think, and not all of this will need to be paid back. Instead of just applying for loans, research grants, bursaries, and scholarships,. Getting the right financial aid for graduate school is crucial if you want to manage your money. This blog post about applying for financial aid for graduate school at St. Bonaventure University will help you explore your options, but make sure you fully understand what needs to be paid back and when.
3. Choose the Right Bank Account
Your bank account can help you save and earn money. Explore special offers for students, cashback accounts, and accounts offering free overdrafts, high interest on savings, and other perks.
4. Get a Job
If you want to increase your income, the best way to do it will always be to get a job. But as a student, you’ll want to focus most of your time and effort on your studies. If you do get a job, it’s a great idea to find something related to your studies so that the two can support each other. You’ll also need to find something with flexibility so that you can reduce hours or take time out when you have exams or important assignments.
Also read: Benefits of Keeping a Simple Household Budget
5. Earn Money Online
Earning money online can be far more flexible than having a job, which is ideal for students. Some fantastic online options include:
- Start a blog
- Make money advertising on social media
- Take online surveys
- Use your skills to work as a freelancer
- Start a podcast
- Create an online course
- Sell an eBook
Some of these options will only make small amounts, but others, like freelancing, can provide a steady but flexible income. Think about your skills, ask yourself if there’s anything that you could do, and take a look at freelancing sites for ideas.
6. Make the Most of Student Discounts
Student discounts are a fantastic way to save money while you study, but unfortunately, many students miss out on some of the best offers just because they don’t know about them. Make sure you check for student discounts before buying anything. You can often check online before heading to a store.
7. Use Savings Apps
Saving money can be hard when things are tight. If your budget focuses on avoiding debt and minimizing expenditures, you might not think that savings are possible. But having savings can help you cope with unexpected costs and luxuries. The good news is that making savings is possible even when money is tight. Savings apps can make saving easy, and while the savings might be small, they can all add up over time.
Another great way to save money is to use cashback apps when you make a purchase. You can usually either get the money back into your bank account or exchange it for gift cards. Just make sure you only buy things that you were going to buy anyway. Don’t buy things because of the cashback on offer, and always check to see if there is cashback available before making a purchase.
8. Start Meal Planning
Food is always going to be one of your biggest expenses. Of course, food is essential, but that doesn’t mean that there aren’t great ways to save. Start writing meal plans and shopping lists, freezing leftover portions, making meals with leftover meat, and shopping for cheaper ingredients. Get into good food shopping habits while you are studying, and you’ll probably keep them up for the rest of your life.
9. Exercise Outdoors
Gym memberships are a big expense for students, and it’s an easy thing to cut to save money. During the pandemic, when gyms were closed, many of us started to workout outdoors or at home. We ran more, we went for long walks, we watched yoga videos online, and we made the most of the great outdoors. Most of us didn’t lose fitness or gain weight during this time, as long as we kept exercising, and a huge number of people have never gone back to the gym.
10. Know When to Ask for Help
Creating a budget, finding ways to save and make money to increase your disposable income, and taking control over your finances will help you manage your money and avoid debt. But there’s only so much you can do. Money worries are a key cause of depression and anxiety, and most of us are guilty of not talking about our concerns or financial situation because we are embarrassed. Knowing when to ask for help and having support to turn to is as important as budgeting and saving.
Higher education is expensive. But with the right budgeting and careful management of your money, there’s no reason you can’t graduate in a fantastic financial position, setting yourself up for a debt-free future.
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