Financing University 101: Creating a Budget

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It’s been a moment, but a while back we talked about the basics of financing university. I’d like to return to money matters once again, this time focusing on one of the simplest tools for managing your student financial status: the budget.

Making a budget for yourself requires a little forethought and some elbow grease, but I promise you that the time spent creating a solid budget will be well worth the money (and worry!) you save during the school year.

Many websites, including your bank’s, do offer budget calculators for students. If that is all you want, a simple Google search will get you what you need. I have always believed, however, that going through the budgeting process yourself helps solidify the importance of sticking to a specific budget. After all, it’s easy to just plug numbers into a calculator and never look at the results again. But if you set aside the time to make a hard copy, it will really ingrain those numbers you crunched into your head. You might even consider taping the sheet of paper somewhere in your home where you’ll see it often. We could call that “living with your budget.” Anything to help you better remember your financial goals!

Education-related expenses

The best and easiest place to start when creating a budget is with expenses that are certain. As a student, I like to begin with education-related costs. While the actual numbers will vary by person, common expense areas include:

• Tuition
• Meal plan or monthly groceries
• Residence or rent (more on that below)
• Books
• Health plan

Tuition, meal plan, residence and the YFS health plan are all fixed fees, so you don’t have to worry about them changing on you throughout the year, which is useful.

That said, students who decide to rent do have to be careful. Some of you will be lucky in finding rooms or apartments that include in the rent payment the costs for hydro and gas. Some landlords will also include free Internet access, cable and security. Make sure to inquire what your rent includes and what might incur extra expenses before you lock down your lease. If your rent does not comprise these amenities, it’s important to budget for a little leeway.

My lease, for example, does not include utilities. While hydro tends to make for a stable bill, the cost for gas varies wildly throughout the year. Some months I have paid as little as $20; in other months, I’ve had to shell out close to $90. If you don’t budget for those kinds of differences, you might find yourself in a tight spot.

Groceries can also make a surprisingly big dent in your budget, especially if you like to eat out often. While I do think it’s important to set aside some money to treat yourself every now and then, I highly recommend looking into grocery shopping on a budget. It is definitely possible to live off of $25-$50 a week, likely less, but that ballpark might be a good place to start. Food Banks Canada has a great resource for those who are looking to grocery shop and eat healthy on a budget. You can also find advice on how save a ton of time on cooking by teaching yourself (hello Internet!) how to meal-plan on Sundays!

In need of more good news? Textbooks are one of the easiest places to save money! While you might prefer to obtain new materials from the bookstore, you can save a lot of moolah by considering options such as purchasing or renting eBook versions, buying used books from students or online and, in some special cases, even borrowing the textbook from the library and photocopying any pages you need! Photocopying tends to cost 10 cents a page, but also keep in mind copyright regulations — you should not copy beyond what is called “fair use,” and you cannot copy an entire work. But if you need to go over only a few pages here and there, photocopying can make for a great option.

Additional Expenses

Aside from the costs above, there are many other expenses to consider. Once you have rent, groceries, utilities, and Internet down, these might include:

• Public transit
• Parking
• Gas
• Car insurance
• Car payments
• Car maintenance/repair fees (for this it’s best to set aside a certain amount of savings in case something pops up — and it will; better to be safe than sorry)
• Cell phones
• Haircuts
• Clothing
• Prescription medication
• Credit card payments
• Spending money

These expenses can add up fast! Here are some questions to think about: Is it cheaper to live at home and drive to school? Or cheaper to live at home and take transit? Is the time of transit worth it? Or might it be a better fit to live on campus and avoid transportation costs? Spend some time pondering these scenarios to figure out the best option for you.

It is fairly simple to save money on cell phones. Instead of upgrading your phone automatically when your contract is up, for example considering switching to a more cost-effective plan provider such as Wind. While the so-called Big Three (Bell, Rogers and Telus) can cost an arm and a leg for monthly services, Wind offers a $40 all-inclusive plan that many students find attractive.

Credit cards are another resource you will want to consider wisely. While having a credit card can be a great way to start building credit, I have personally found that capping my credit card at a reasonable limit keeps my debt and payments to a manageable amount. My personal credit card limit sits at only $500. I don’t rely on the card, but rather use it for online purchases, generally when I know I have the money to either pay it back immediately or within the month. I also chose to get a Scene Visa because the reward of being able to see a free movie every couple of months makes for a nice treat — and one that I don’t have to include in my budget! 😉

Income

Now for income! This is where you start to offset the expenses in your budget. Forms of income for students generally include:

• Scholarships, grants and bursaries
• Part-time work
• RESPs
• Student loans or lines of credit
• Personal savings
• Gifts from family

Part-time work can be variable, so it’s important to try to estimate as close as possible. Many students also work full-time during the summer, so don’t forget to take that into consideration while budgeting. There is one important point I really want you to remember about your income: student loans or lines of credit have to be paid back. They aren’t disposable like income gained through part-time work. For this reason make sure you keep a handle on how much of your loans you are using. Some students have a fair amount of excess loans that they like to spend on personal-use items or activities — which is fine as long as you remember that you have to pay back that much more in the end . . . with interest. If you can find the right balance between maintaining your budget and treating yourself, it will help minimize the debt you have on graduation.

The Final Budget

Now that you have an idea of the expenses and forms of income that might make up a budget, it’s time to get to work. Below I’ve included a sample student budget form I found online. I recommend printing it off and spending some time filling it in. Don’t be afraid to ask your parents, older siblings or friends or to look online to get a good idea of how much to budget for some of the variables such as groceries or car-related expenses. The more accurate your budget, the better!

One final pro tip: revisit your budget before the beginning of each new semester and as summer approaches to tweak and make improvements as needed.

Have any additional questions about budgeting? Feel free to tweet me at @yorkustudents, or comment below and I will be more than happy to help!

-M