The importance of budgeting for students cannot be over-emphasized. As a young adult, budgeting is not something we do often or even remember to do. It’s like as soon as the cash comes in (wherever you get your allowance from) it’s all expenses and enjoyment. For students, budgeting is essential, especially if you love to save and invest, you have to manage your money except probably you have a cash cow that keeps on giving. This post will give you insights on how to budget your allowance as a student.
A budget is an estimation of your revenue and expenses over a specified period of time. It is usually compiled and re-evaluated periodically.
Having a budget as an adult is very important. For students, it is crucial because the money is limited and usually allocated for a period of time e.g. monthly. Budgets provide a defined explanation of how you intend to allocate your money based on your needs and not your wants. It prevents overspending and wastage of your limited and very precious funds. When any student is creating a budget, you should consider the following factors;
- Decide on a budget period.
What is the time period you’re deciding to budget for? Is it a week, a month, two months, a semester or a year? How much do you make, or receive at the beginning of this period? Evaluating these factors will be the first step to make a few lifestyle changes. The best time to allocate your budget is as soon as the money comes in.
- Choose a budgeting tool.
A number of tools can help you track your income and expenses. A budgeting app, a spending tracker, a standing order, or even a paper and pen can help to keep track of your spending.
- Review your income
Evaluate where your money is coming from. How much money do you have coming in from family, side hustles and other sources? Account for everything and give yourself an estimate. Is it a standard? Can things be different if you’re on holidays, or if ASUU strikes? Estimate all these factors, and then you will arrive at a sum.
- Save 5 – 30% of your income.
Saving is a must if you’re a budgeter. It makes you see the efforts of budgeting, and just shows that you can save money despite your expenses. Saving for goals and emergencies, little by little, to invest in you, or to buy something nice is a big YES. There are ways to save automatically, immediately the money comes in, a certain percent is saved automatically so you don’t have to use it yourself. I use Piggyvest to save my money.
- Create a budget and stick to it.
Keeping the previous points in mind, you should create a budget based on your income and expenses. Your budget should be a reflection of your personal money habits and standards. Making changes according to your cash flow and needs is unavoidable, but keep your goals in mind and stick to your budget like a law.
- Sleep on big purchases
Generally, the big purchases take the bigger chunk out of our budgets. If you’ve planned to buy something that takes a substantial amount out of your budget, you might want to sleep on it first, give it some thought. For first year university student budgets, try to avoid the big purchases generally, or have a family member handle it for you. In order to build your budgeting skills as a student, discipline is highly required. Over time, you will definitely see the results of budgeting, having savings and investments as well.
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