How to Budget and Why it is Important

Learning how to manage your finances as a student for the first time is always tricky. There is nothing like living on your own for the first time and trying to figure out how to make the money you earned over the summer last the entire academic year. While managing and budgeting your finances is definitely tricky, it is not impossible.

The first time I realized I needed to start budgeting my finances was in second year of university, when I had first moved off campus and now had to pay for rent, utilities and groceries. I had always been good at saving my money in the past, but that year I was completely overwhelmed. I couldn’t figure out where to start for budgeting, how to figure out my monthly expenses and how to pay for it all only using what money I had in my savings. I ended up leaving that school year with $50 in my account and a determination to figure out how to budget.

Start your Spreadsheet

The best way to start budgeting is starting small, by making a monthly budget before thinking of how much you would like to spend all year. Making a monthly budget can help you see exactly how much you need to spend on rent, food, utilities and tuition each month, and it can also help you gain a big-picture view of your expenses for the whole year.

To start, make a spread sheet and compare your expenses and income for the year; as a student, you might only be working with the money you made over the summer and any bursaries or funding that you may receive.

Carleton University offers many scholarships and bursaries for students that are definitely worth looking into. I apply for the General Bursary every year and the money I get it is always budgeted to pay for a bit of my rent for the year.

Tools to Use for Budgeting

I began budgeting with no idea where to start, but soon found that there are many fantastic budgeting tools that you can use, such as Mint, Spendee, You Need A Budget (YNAB) and Pocket Guard, all of which Carleton University highlights on their Awards and Financial Aid page. These tools can be used in collaboration with an Excel spreadsheet.

After the Spreadsheet

After making your spreadsheet you can use one of the tools listed above to track your spending for a month or you can simply save all of your receipts and add everything up at the end of the year. Personally, I feel as though the app gives you a more accurate calculation of how much you spend, and you save a few trees in the process.

Carleton University also has a great budgeting calculator that you can use to determine an estimate of how much you spend each month – not including the small miscellaneous items that you won’t even notice, such as paying for an Amazon Prime account.

Carleton’s budgeting calculator breaks down into sections: Education Expenses, Monthly Expenses and Monthly Income, which helps you see how much money you will be spending each month and also how much of an income you need.

Determine “Wants” and “Needs”

After figuring out how much money you are spending each month, determine which of your expenses are necessary and which are “wants”. A necessary expense could be rent, groceries and your phone bill, while a “want” expense could be buying Starbucks when you have coffee at home.

While it is good to differentiate between needs and wants, after you determine how much you need each month and how much money you have saved, you can see if there is any extra wiggly room for extra things that you may not need. I always leave room in my budget for getting takeout once or twice a month.

Helpful Money-Saving Tips

Making your budget is the easy part but sticking to it is even harder – finding ways to save money each month is key to sticking to your budget. One thing that I do in order to save money is check the grocery fliers to see what is on sale before planning my grocery list, and I always try to buy as much as I can in bulk, as it is cheaper that way, and freeze the extra bulk items that I can’t use up right away.

For more money-saving tips check Carleton University’s Award and Financial Aid Page where they offer some great money-saving tips and tricks.

If you are interested in learning and hearing more about money, check out Carleton’s CU Money Blog for more tips and information!