How to budget as a student - 7 step guide

If you’re starting University, or are a student already and feeling a little out of control with your finances, this is your sign to create a budget and make it work for you. Setting out or reviewing a budget can feel overwhelming, especially if it means breaking spending habits you’ve had for a while. We’ve put together a step by step guide on how to budget and save, to help set you up for your student years, so you come out the other end in the best possible financial shape. 

1. Work out your financial goals

Thinking about your financial goals is a great way to start the budgeting process. Cutting out spending can be hard, so visualising what you’re working towards can be an effective way to stay on track when it comes to budget. Whether you’re wanting to eventually buy a home, a car, or you’re planning to travel, your goals will help drive the success of your budget and will be a good point of reference to look to when you’re feeling unmotivated.

Financial goals do not have to be set in stone, they can move with you as your situation and priorities change – which is likely once you finish university and embark on a career.

2. Understand where your money is going

If this is your first time living out of home, you may have not encountered too many expenses up to now. As you move to a more independent lifestyle as a student, it’s important to understand what needs to be spent on necessities (perhaps textbooks and utility bills) and what is being spent on things that are just nice to have (such as nights out and takeaway coffee). If you haven’t tracked your spending before, now is a good time to start, and that way you’ll have a better idea about where your money is going when you go to review your budget again in the future. 

If you haven’t been consciously tracking your spending you might be able to pick up on your spending habits by looking back at your previous bank statements.

3. Pinpoint areas for improvement

Can you cut back on spending in certain areas, such as the grocery bill, or can you look at stopping spending completely on certain things, such as buying bottled water while out? Once you have tracked your spending and written it down it will be a lot easier to find areas for saving. If you can cut back on your weekly grocery bill by $20, that’s a saving of just over $1,000 in a year – potentially enough to take a long weekend away, or start saving for a car for when you graduate.

Think about how small changes might add up to make a big difference. For example, the $20 saved at the supermarket checkout might be from cutting out magazines, switching cereal brands, and avoiding the chip and chocolate aisle.  If you’re not convinced, give it a go and see how you feel after a month. Remember to track your spending.

4. Set out a budget

Next step would be to set out a budget – how much money is coming in each month and how much is going out? There’ll be a certain amount of money that has to go out for things such as rent, transport, and food. However, as you will have discovered in the previous step, there may be certain amounts of money going out that can be reduced or totally stopped. Setting out a budget will help you get a clearer picture of just how much you can save by spending a little less or completely sacrificing unnecessary expenses. You might like to set up a weekly budget to keep a close eye on your weekly expenses.

5. Stick to the budget

Once you have drawn up a budget you’ll have to work at sticking to it. Sticking to a budget can be hard work, especially if you spend money out of habit. Here’s some simple tips to help you stick to your budget:

• Picture your goal – travelling, buying a car, or perhaps there’s a particular event you want to go to
• Track your spending and reference your budget
• Plan weekly spending ahead – this includes meals and activities.

6. Review

Remember, things don’t stop here, it’s important to review your budget to ensure it’s working for you and to ensure you are working towards your goals.

7. Feel proud about your achievements

Budgeting isn’t easy so it’s important to give yourself a pat on the back for your budgeting achievements. Not only will this make you feel good it will also help to keep you on track with your spending, and set you up with great habits for when you finish your studies.