A budget is simply a strategy for managing your money, regardless of how much or little you have. It’s not just for those with high salaries; everyone, including students who live on funding or allowances, needs to be able to live within the limits of their income. Being in control of your money reduces stress and helps you get through difficult times.
PLAN AND TRACK
Drawing up a budget is easy, but be sure you track your expenses so that you stick to it. Use a spreadsheet or an app to plan your budget, and your banking app should help you track your spending to that plan. |
Having a proper budget will help to:
Knowing your expenses also quantifies your costs and can be used to prove how much money you need when applying for funding.
The first step is to understand what money is coming in and from where. You may be funding your studies and living expenses from any one of these sources or a combination of them:
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BUDGET TIP If you receive an annual bursary or grant, keep it in a separate savings account. Deduct the amounts you need to pay in lump sums for your fees and then calculate what you can spend monthly on your living expense. Transfer only that amount each month to your day-to-day bank account for your living expenses. If you leave the full amount in your day-to-day bank account, you may be tempted to spend it. |
Some money, such as that from a bursary, may be paid to you annually. Other income, such as grants, parental allowances or your own earnings, will be paid on a monthly or weekly basis. If you work part-time, don’t forget to account for income tax if your earnings exceed the tax threshold.
If your income fluctuates from month to month due to part-time or freelance work, calculate your monthly average. Add together the last three months’ worth of income and divide it by three. If you also receive an annual payment to cover your living expenses, divide that by 12 to get a monthly amount. Adding these sources of income together will give you the monthly amount available to cover your living expenses.
Your expenses will fall into one of two broad categories:
Some living expenses are fixed; they remain the same each month, making it easy to budget for them. Other expenses are variable, which means the amount you need may be higher or lower each month. Often these variable expenses cause us to run out of money because we underestimate them or we spend more on them than we can afford. Try to be realistic when quantifying these costs and adjust them throughout the year. Remember to factor in potential variable costs like those for medical treatment.
Fixed and variable expenses may include:
| FIXED EXPENSES | VARIABLE EXPENSES |
Rent or accommodation costs |
Entertainment |
| Books | Eating out or takeaways |
Groceries |
Leisure travel |
| Transport | Car repairs and maintenance |
Debt repayments |
Hobbies |
| Insurance for your car or cell phone or household goods | Clothing, shoes, make-up |
Internet and cell phone costs |
Medical expenses |
Once you’ve quantified how much is coming in and how you intend to spend it, ensure that your budget balances. If your expenses exceed your income, make some adjustments. Cut back on the expenses that are not essentials, such as entertainment, takeaways or hobbies. If you have money left over after creating your budget, use it to pay off debt or save it in a separate account for a rainy day.
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IF YOU HAVE A CAR |
Your budget is a living document. Revisit it at the start of each month to ensure that you spend appropriately. If your income or expenses change, adjust your budget accordingly.
Once you’ve mastered the art of budgeting, you can consider setting financial goals, such as saving up for a special occasion.
Managing your money with a budget relieves financial stress, gives you control, and develops good financial habits that lay the groundwork for financial success in life.
Maintaining a car can be expensive, and costs are often unexpected. Establish a car maintenance fund in a separate bank account and deposit a fixed amount each month. Only spend this money on car maintenance.