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Budgeting isn’t something all students think about. Starting uni can feel like there’s so much to think about: making new friends, attending lectures and the all-important Freshers week. But making a budget should be one of your top priorities.
Now, this is more important than ever. The cost of living has unfortunately increased with inflation rising by over 11%, while the maximum student funding has only increased by 2.3%. Making a budget and sticking to can be crucial. Luckily, we’ve listed below some top tips on how to budget and save money where you can!
What’s a budget?
A budget is a spending plan based on outgoings and ingoings. It estimates how much you’ll make and spend in each period (usually over a week or a month).
Why budget?
Budgeting helps to keep your finances under control. It ensures you don’t run out of money or end up deep in your overdraft. If you stick to your budget, you should always have enough money for the essentials, and some left over for fun stuff.
A budget also allows you to make goals and save for things which are important to you. Whether that’s the latest iPhone or a trip away with your pals. With a budget, you can make your goals happen.
Dennis Harhalakis, the founder of Cambridge Money Coaching, adds: “Getting on top of your finances requires an investment of time, and this time needs to be scheduled. Willpower is not enough. Make some time and stick to it.”
Creating a weekly budget
As a student, it’s best to create a weekly budget to ensure you’re not overspending. This can be tricky as your biggest source of income will most likely be your student loan which gets paid at the start of every term (your tuition should go straight to your university).
When you get your first maintenance loan payment from Student Finance, it might well be the most amount of money you’ve ever had sitting in your bank account, but don’t blow it all in one go. That money is supposed to last all term! Check out this blog if you want more advice on making the most of your student loan.
One of the simplest tips is to ask if you can pay rent every term rather than every month. So that a big chunk of your expenses is taken care of, and you won’t have to stress about accidentally spending your rent money.
How to budget money as a student
Student budgeting might sound challenging, but it can be broken down into 4 simple steps.
4 simple steps to budgeting
- Work out the amount of money coming in per term. This includes your maintenance loan, any scholarships or bursaries, regular money from parents or family, and any income from a part-time job. If you’re not sure how much you will be getting from a family member or how many hours you will be working, it’s best to underestimate.
- Work out the amount of money going out per term. This includes essential and regular payments such as your rent, bills, subscriptions, gym membership, weekly food shop, travel and any debt payments or regular savings. If you’re unsure how much you will spend on your weekly food shop, it’s best to overestimate – you can always adjust it later.
- Make sure you have more going in than going out. This might sound silly, but you must ensure you have enough money to cover the essentials at a minimum. If you don’t, you might need to get a part-time job lined up as soon as possible or see if you’re eligible for any scholarships, grants, or bursaries.
- Subtract your outgoings (money out) from your ingoings (money in) and then divide by the weeks in the term. This is how much you’ll have left for fun stuff each week. This includes anything that wasn’t part of your essential expenses, such as new clothes, going out, takeaways etc.
Set yourself goals
An essential step in budgeting is setting goals. Whether that’s saving for a holiday, having more money for going out or just trying to spend less. Goals will help you to reign in your spending by giving you something to work towards.
Analyse your spending habits
Another important step is to analyse your spending habits. This’ll give you a complete picture of your spending habits and allow you to see where your money is going and where you might be overspending. For example, if you notice you’re spending a big chunk of your money on going to the cinema, then maybe try a movie night in!
Your bank account might be able to help you by breaking down your spending into different categories. If your bank account doesn’t offer this, try an app that uses AI to help you budget, like Cleo. Or you can do it the old-fashioned way using a student budget spreadsheet and fill in your spending from the previous month.
Tips to help you budget better
Even if you follow the above steps and create your weekly budget, there are still many ways to improve your budgeting and save money.
Make sure you’ve got a student bank account
If you’ve not got a student bank account, then get one.
A student bank account is the best option for those in higher education. To open one, you’ll need proof of identity, address, and proof that you have been offered a place at university. In addition to paying money in and out, student bank accounts come with interest-free overdrafts and useful freebies. Check out the Money Saving Expert to find out which student bank account is currently considered the best.
An interest-free overdraft means you can be overdrawn up to the limit (usually between £1000 – £2000), and you won’t be charged. So, you can have minus money in your bank account. However, it’s important to only use this as a safety net or for emergencies. An overdraft doesn’t mean free money!
Use a 2-bank account approach
Try this useful strategy to split your essential and non-essential spending. Use your main bank account for essential expenses only. Use this for direct debits for essential stuff and to pay for your subscriptions and your weekly food shop. Don’t take this card on nights out!
Each week or month, you can then transfer the amount you have to spend on non-essential items for that time period to your second bank account. You can set up a direct debit so that this will happen automatically. You can even divide this up into pots for different categories (like takeaways or clothes) to monitor your spending. Use this card for impulse purchases.
This means you will always have enough to cover your essentials.
If you find yourself frequently running low on fun stuff money, try and cut down on your spending. Maybe consider looking for a part-time job, doing some freelance work like tutoring or reading up on ways to make money as a student.
Use pots or saving accounts to organise your money
Nowadays, most bank accounts offer easy-access savings accounts or pots so you can easily organise your money. If your bank account doesn’t offer this feature, Monzo offers pots, categorises your spending, and is super easy to set up. Pots can be a valuable way to set aside money for certain activities (like nights out) or save for a future goal (like a summer holiday).
For large savings, consider using the top easy-access saving account or look at the best savings accounts for students instead. Interest rates are extremely high right now, and this’ll ensure your money is doing the most it can.
Make use of round-up and cash back
Many bank accounts also offer the option to round up your purchases. This can be an effortless way to save money. When you pay for something, your bank account will round that purchase up to the nearest pound and put the leftover pennies in a savings account.
These roundup saving accounts usually have much higher interest than standard savings accounts. For example, Chase offers 5% interest on their round-up account.
Another great option to maximise your savings is to use cashback offers. One of the best offers right now is Chase which offers 1% cash back on all debit card spending for the first year. This is essentially free money!
Use student deals and discounts
Loads of places have student discounts or special student offers. Ask if you’re unsure if a place has a student discount. A quick Google search will tell you if there’s any offer available if you’re buying online.
There are also discount websites, such as Unidays and Student Beans, which you can sign up to for more student discounts and offers. For even more student discounts, you can pay for the TOTUM card, which has unique discounts on over 350 brands.
Although not strictly for students, the 16-25 railcard offers ⅓ off of all rail travel. It’s £30 for a year or comes free if you have a Santander student bank account. If you travel home by train, the card usually pays for itself after a few trips!
Pay attention to how much money you’re spending on food
After rent and bills, your weekly food shop might be one of your biggest expenses. So, it’s essential to set a weekly food bill budget and stick to it.
One way to make this easier is to use a weekly meal planner board. This will help you plan out all your meals for the week rather than just picking up what looks good when you get to the supermarket.
Another tip to save money on your food shop is to look out for yellow sticker bargains. These yellow sticker food items are about to go out of date, so they are sold at a reduced price.
Most supermarkets put yellow stickers out in the evening, so try shopping then to snatch up the best deals. You could even try a yellow sticker shopping app like the Gander app. This app tells you what food is reduced at supermarkets near you, so you don’t need to guess.
Make sure you’re not overspending on your bills
When living with a partner or housemates, it can be easy to offload the responsibility of sorting bills to someone else, especially if you’re paying bills for the first time. However, this can make it difficult to keep on top of your gas, electric and water costs. Instead, try assigning one bill per housemate. This person will then be responsible for setting up the direct debit and watching usage to ensure the bill doesn’t get too high!
Here are a few things you can do in your student house to live more sustainably:
- Turn off standby appliances
- Turn down your thermostat
- Wash clothes at lower temperatures
- Take shorter showers
- Use a smart metre to monitor your usage
Paying bills can be one of the most stressful parts of student life, so you might want to consider using a bill-splitting service to help streamline the process.
Here at Split the Bills, we do the hard work of setting up accounts and direct debits with your electricity, gas, and water providers. We ensure the bill is split equally across your house and ensure everyone pays their share. All you have to do is pay one neat bill every month (no matter your useage), meaning you can have peace of mind and easily budget for the rest of your expenses.
If you want to make budgeting easier, then you can find out more about what we do or get in touch with our team!
Split The Bills is not a financial advisor. This should not be considered as professional financial advice. Do your own research & consult a professional financial advisor before making any financial decisions!
Electricity. Gas. Broadband. Water. TV Licence.
Want to find out more?
Interested in splitting your student household bills rather than splitting up friendships? Check out SplitTheBills now and make life easier for everyone in your shared student house.
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