As the Fall semester fast approaches, one of the most important skill that a student can have is how to budget.
As a student, planning out your budget for the semester is crucial for not becoming overwhelmed and stressed about paying for your studies. By budgeting and learning to manage your finances, you can focus on the other things that make college life worthwhile.
In this post, I provide some easy budgeting steps to help students stay on top of their finances this semester.
1. Knowing what to expect – Variable vs. fixed costs
First, you would need to determine your monthly expenses and there are two different types – fixed and variable.
Your fixed costs would be those expenses that generally do not change over a certain period of time. For example, your tuition would be considered a fixed expense since the amount is set and will not change over the course of the semester. Variable expenses are those that may be unexpected or vary in cost over a period of time such as entertainment.
To get a better understanding of what to expect, I recommend using an excel sheet to list all possible expenses that you may have throughout the semester (including your morning coffee) and then categorize them as fixed or variable. Also, be as realistic as possible!
2. Funding your education – Figure out how much you can spend
Next step is to figure out your funds to help cover those expenses. For students, this could include a part-time job, a work study position, scholarships, grants or a student loan.
I recommend starting with scholarships and grants, which are great ways to fund your education without debt. To find out information about applying to scholarships and grants, my advice would be to visit your college website or discuss with your financial aid office to understand which scholarships and grants are available to you.
Next, if you are able to work while you study or require placement hours for your program, an internship or work-study position may be a great avenue to explore. Try asking your professors if they know of positions available in your field of study or perhaps signing up to a work-study program at your college.
Once you’ve exhausted the avenues above, perhaps you may want to consider a student loan. For students in Ontario, the Ontario Student Assistance Program (OSAP) would be a good resource to explore.
After securing ways to pay for your education, in the excel sheet, add all the potential sources and the amount of funds that you can expect from each.
3. Getting your financial picture – Evaluate the difference
Find the difference and subtract your expenses from your available funds. This exercise will provide insight into whether you will need to reconsider some of your expenses.
If your expenses far outweigh your expected funds, it is time to evaluate where you can reduce and save. For example, opting out of your daily Starbucks and making your coffee at home.
Note, fixed costs are unlikely to change and should be considered a priority especially since tuition, textbooks and rent are common costs for students. On the other hand, variable costs are much easier to reduce and save.
4. Knowledge is power – Regularly track your actual spending
One thing to note is that budgeting is an ongoing process and tracking your actual expenses throughout the semester will help you have a clearer picture of your finances and will allow you to continuously plan ahead and save for future endeavors.
Join me next week when I will be posting: Tips for Learning Online.
Until then, take care.