When starting your new life as a university student, budgeting may understandably not present as the most exciting exercise on your task list, however it is a crucial one, especially if this is the first time you have had to manage your own money. Understanding the value of and reasons behind budgeting, beyond the obvious reason of saving money, can help serve as a motivation.
Why set a budget?
To learn the value of money: As you are studying to build your future, grasping an understanding of money as a finite resource is a key part of this. This can complement academia nicely by generating motivation for your early career moves, and informing your goal setting for the future.
To gain a sense of autonomy: Being in charge of your own spending is an empowering feeling. Not only is budgeting about restricting your spending, it also means you can choose when and how you do spend your money.
For self-esteem: As with mastering any activity, once you have built the confidence in your ability to spend and manage your money, a very adult trait, this will contribute positively to how you feel in yourself as you transition into adulthood.
To achieve your goals: It is likely that you will be confronted with the expectation to cover longer-term wants within your allocated budget. Resisting feeling cash-rich in the present and understanding what you must save to achieve your longer-term goals and larger purchases is one of the many practical advantages of budgeting.
To build credit: Harmless things such as bills bouncing back or forgetting to pay invoices on time can impact your credit score. While this may seem harmless as a first or second-year student, the consequences will hit later on when you try to rent a flat or buy anything on a finance package for the first time. Setting your budget with regular reminders of due dates or enabling direct debits for your bills, will help eliminate these moments.
How do I set a budget?
Establish your income: How much money will I be receiving per year (e.g. from parents, student loan, savings, part-time work) and where is it coming from? This can then be broken down into terms, months, and weeks.
Estimate your outgoings: To do this it can be helpful to look at your past spending habits; how do you usually spend your money? Then decide which of it is essential and which is not. What additional costs will you have at university? For example, you may not previously have had to purchase your own food shopping and pay bills. When you are doing this, make sure you are being realistic, as otherwise your budget won’t be accurate. Budgeting doesn’t always mean you must economise; it is a tool to help you understand your spending.
Create a weekly-monthly-yearly budget: Looking at your short-term spending makes it easier to flag when you aren’t sticking to your plan, and to avoid this escalating. Beyond your personal budget you have created, we recommend apps such as Yolt and Monzo to help manage this for you.
Lastly, don’t forget to make use of all of the amazing student discounts that are available; UniDays, Totum, TFL, Apple, Spotify etc.
Author: Lily Dottore, Team Assistant