Budgeting
With many thousands of £s sitting in your newly opened current account you may feel Christmas has come early and the temptation to spend is great. What you need to remember is that the money you have at the start of term may have to last throughout the term and beyond, until you receive your next loan cheque or other income.
It's a good idea to plan a budget - and an even better one to stick to it. Make sure your plan is realistic – allowing a reasonable amount for going out as well as essentials like food and accommodation.
You need to decide whether you're budgeting for term time spending only, or for the whole year. Some students, especially those living in halls of residence, may budget on a term basis if they plan to return home during the holidays.
A simple way to budget is to take your total income over a set period of time and divide by the relevant number of weeks or months. So, for example, if you want to work out a monthly budget for the whole year, you need to divide your expected annual income by 12 to give you your monthly income (£0000/12 = £000). Don't build in income assumptions that may not come off. For example, don't plan a yearly budget based on your income from the Student Loan Company with an assumption that you'll earn ££s doing a summer bar job that you don’t already have.
Once you've established your monthly income, you need to set out your spending. Start with fixed and essential outgoings – like rent, bills and travel costs. Then list all your other, less fixed outgoings – food, clothes, entertainment and so on. Add up the outgoings (B in the simple worked example, below) and take them away from your total income (A).
If the balance is positive, you've established a budget that you can live within. But if B is greater, then you then have a negative budget which means one of two things if you want to avoid running into more debt:
- You need to cut back on the non-essentials to make the budget balance/
- You need to find a way to increase your income.
For many students balancing their budget causes as much stress as sitting finals. If you think you'll be heading towards a significant budget deficit before your next income comes through, don't ignore it. Talk to your bank, student union rep or parents.
Table 1 shows an example of a simple budget:
(N.B. If you're living in halls of residence or with other students only you will be exempt from paying council tax.)
| Your Income | |
| Student Loan | £ 000 |
| Parental Allowance | £ 000 |
| Part Time Job | £ 000 |
| Total Income | £ 000 |
| Your Spending | |
| Rent | £ 000 |
| Council Tax | £ 000 |
| Utility Bills | £ 000 |
| Insurance | £ 000 |
| Travel | £ 000 |
| Food & Clothes | £ 000 |
| Beer/Wine/ Going Out | £ 000 |
| Total Spending | £ 000 |
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