Monday, 18 August 2008

Money, Honey Part I: Budgeting

Image thanks to Banksy


So, you’ve picked your ideal degree, got your place, discovered you only need 40% to pass in your first year and set about planning 12 months of fun and frolics, when those dreaded words are mentioned: student finance.

Hang on... now mum and dad are so far away, what happens when you’re desperate for that £20 towards new shoes? What about that night at the student union? You know you can’t afford it but you just have to go.

And herein lays the conundrum. What is a fresher to do? All those social engagements and not a penny to spare; all those new people you're meeting, of course you want to keep your image tip-top, but those £80 stints in Topshop are no more seeing as you can barely afford your weekly ration of beans on toast…

Let’s face up to it, come on now, no cowering behind that computer chair. You’re in deep, and if you’re not yet, you may well soon be if you don’t keep a check on what you’re spending. Money, that elusive thing your parents always dealt out and that maybe you had the odd wedge of after slaving away at a menial job – but that soon went on £3 double vodka Redbull’s and bargain heels – all of a sudden it’s vital. It’s your lifeline.

Money = Survival.

Haven’t yet considered this? Nattered away ecstatically to all your friends about the joys of 0% overdrafts and ‘free’ money from the government? Sorry to rain on the parade kids, but that’s not free money, that’s your debt.

But never fear! It isn’t all doom and gloom. I come baring more than just white-knuckle home truths. I’ve got gift-wrapped solutions just for you.

Money: You want it. More often than not, as a student, you just won’t have enough. How about we see if we can make what you do have work hard for you?

Firstly, and most importantly, you need to budget. There’s that word, I can hear you scoffing at it already, but it’s not just for married couples with two kids and a dog called Buster, it’s an essential for any type of money management, particularly that of a spend-thrift student.

Here are my key tips for budgeting:
  • Know your outgoings. I’m talking down to the last £/$. Keep receipts if necessary, file paper statements in a sparkly folder or regularly check your online bank. You need to have an accurate picture of exactly where your money goes or you’ll get to those poverty stricken days at the end of the month thinking: ‘where did that 40 quid go?’
  • Know your income. Seems obvious, but know your outgoings and your income and, hey presto, you can avoid any nasty surprises like ridiculous bank charges for unplanned overdrafts. Include your loan, part-time job, plus any bursaries and parental income, but avoid that tempting 0% overdraft for now… (more on that one to come!)
  • Keep records of all of this, and I don’t mean scribble it on the back of a bus ticket, I mean keep a notepad, a journal or even an Excel spreadsheet for the more geek-chic! Think it’s dorky all you like, but give it a go, even for just a couple of days, you’ll be amazed at exactly how much you spend on biscuits and hair removal products.
  • Compile a list of essential outgoings for each month, and ladies, I’m talking genuine essentials, like rent, not cherry lip balm and half pound bars of Galaxy chocolate (these come under extras!) Once you’ve done this you can calculate any spare cash and divvy it up at your delightful discretion. No one wants to live like a recluse. Make sure to budget for extras like nights out, and then add at least 10% of your toal on top of this as a comfortable piggy bank for those unexpected spends like it being your mum’s birthday tomorrow.
  • Consider separate accounts for things like bills, rent and every day spends. For example: use your new student account for general spending, and your existing current account for regular outgoings. Set up standing orders between them and make sure you’re always covered for costs. Dividing and organising where your money is and when it’s leaving your sweaty grip will result in you feeling a lot more in control and, more importantly, it’ll avoid that forgotten phone bill that went out of your account unnoticed and left you dangerously overdrawn.

Feeling lazy? Try one of these online budgeting tools: Average / Good / Better

There are loads out there so don’t limit yourself, search out the one best suited to you. Print out your results and learn from them! Any tips to share? Comment away!


(And then read parts II and III in the Money, Honey series)

3 comments:

I Like You said...

I like the new banner.

Voila Megan said...

'i like you' - thanks lil'mama! it's pretty simple but i thought it stood out a bit more than what i started off with.
Adoration,
Megan x

Ayomide said...

What? Galaxy bars aren't essential? oh fine! But on a more serious note, your final piece of advice about separate bank accounts for separate bugests is super on par, and that's exactly what I do. And my bank card is only linked to me "play" account so there isn't even the ABILITY to spend the money in the other accounts since it's only accessible by going to the teller. And by the time I have to stand in line, fill out a form, etc. I don't even care that much any more about what it is I wanted to buy.

And yes, I know I'm commenting about this a year late, but I only just read this article now ;)

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