What is a budget?
A budget is a way to see how much money you have and what you will spend it on.
The money you have coming in is called 'income'. As a student, your income will include:
- Any scholarships you receive
- Any savings you have
- Any money you get from your parents
- Pay from part-time or holiday work. (You should not rely on this: your university may limit how much work you can do, and even if you have professional experience at home, you may only be able to get low-paid work while studying.)
The money you spend is called 'outgoings'. As a student, your outgoings will include:
- Books and other course materials
- Mobile phone
If your income is higher than your outgoings, then you are in a good position. If your outgoings are higher, you need to find a way to reduce your spending.
Normally, you would make a budget for a year. This gives you a broad overview of whether you will have enough money or need to save money somewhere. Once you have made your annual budget, though, you might want to make smaller budgets to help you plan your money by the term, the month or the week.
Building a budget will not be the most exciting thing you do at university - but with a small amount of effort, it can give you more opportunity to do the things that really matter to you.
Your money will go further
Lots of people have a great time in their first few weeks at university, when their bank accounts are full. When the end of the year comes around, it can be a different story. A budget ensures that you know what you can afford to spend before you run in to trouble.
You won't be as stressed
University can be stressful in all sorts of ways, but if you have a good budget, money worries don't have to contribute. Building a good budget means that you don't have to worry about how much you are spending day to day, and you won't have the stress of checking your balance and finding that you've run out of money.
You can choose to spend on what you need most
If you don't know where your money's going, it's very easy to spend so much on canteen sandwiches and mobile phone games that you can't pay for the things you actually want. A budget won't let you buy a private jet, but it will let you prioritize the things you need and want.
You can prepare for emergencies
However well you plan, not everything will go the way you hoped - but you can be prepared for when things go wrong. By including some money for emergencies in your outgoings, you can take away some of the worry. And if you don't need it after all, that's a nice little bonus.
It's the start of a habit
University may be the first time you have to manage your finances completely independently. That means it's a good time to learn how to do it properly. If you get used to budgeting while you're at university, you'll find it much easier to manage your money once you start work.
The International Student Calculator will take you through these steps one at a time.
Add up your income
Put together your income from part time work, savings and anything you get from your family.
If you are using savings, remember not to include the full amount in your annual budget if you intend to make it last a number of years.
You might not know exactly how much you'll be able to get from work - try to make a realistic estimate. You can reassess your budget when you know what you'll be earning.
Add up your spending
Put together all your spending, whether it's big things like rent or small things like socks.
Working out how much you will spend can be very difficult: there will probably be lots of things that you forget about, or which add up to more than you expect. If you're making your budget in advance, try to overestimate rather than underestimate - at least that way the surprise you get will be a pleasant one.
It's also worth including some emergency money in your budget, to cover any costs you haven't planned for.
Check the total
Once you've written everything down, subtract your outgoings from your income to get your total. If it's negative, you need to think about where you can cut back on spending. If it's positive, that's great - but make sure you haven't underestimated your spending.
The International Student Calculator will show you at a glance what your balance is: on the balance screen, the background will turn green if your balance is positive and red if it's negative.
However you build your budget, it won't do you much good unless you use it. Keep a copy of your budget somewhere you can refer to it, and keep track of how much you spend on what to see if you need to think again. Find out about some easy ways to stick to your budget.