A budget is a spending plan, and budgeting is creating a plan for spending your money. Tuition costs for universities across Canada have increased; therefore, as students, we often do not have the funds to do everything we want.
However, creating a money-spending plan can help you prioritize and focus on putting your money into the necessities. Part of budgeting is balancing your expenses and income; spending more than you earn can slowly sink you into debt.
Budgeting can seem daunting, especially on top of all the other stresses that come with being a student. However, you are not alone! Thankfully, tools exist to help simplify the budgeting process, such as apps, YouTube videos, free online templates and more!
Why Is Budgeting Important?
Statistics Canada reports that Canadian undergraduate students in 2022/2023 paid an average of $6,834 for tuition per year. Compared to 2021/2022, there is a 2.6% increase, and it is most likely to continue to increase alongside inflation. For graduate students, the average tuition cost was $7,437 per year, a 1.7% increase from the previous year. Hence, the importance of budgeting among rising costs for students.
Budgeting lets you know how much money you have and how much you can spend on what is essential. Following your budget can help keep you out of debt or work your way out. You may be surprised by how much you spend! Changes in spending habits can free up some space, and the money you save can be used on other expenses like paying off debts.
Avoid Certain Expenses
Separate your wants from your needs. Identify necessary expenses like tuition, rent, and food. This also helps you reflect on unnecessary costs like eating out or drinking with friends.
School is already stressful; being in debt only adds to the stress. Having a budget can help reduce financial stress so you can focus on other essential aspects of your life.
Valuable Life Skill
Knowing how to budget will benefit you your entire life. Once you graduate, you will need to understand your finances if you wish to buy a house, retire, travel, etc.
Healthy Financial Future
Instead of accumulating debt, you prepare for the best possible outcome once you graduate. Having control over your spending helps you create a healthy financial future! You can then afford or save to put a down payment on a condo or house, have a good credit score and even be able to afford an emergency fund.
How to Start Budgeting
Start with the basics! Create a simple budget that includes only two steps to track. The easiest is also to just use one bank account for all income and expenses.
Step 1: Track Your Income
Add all your income from all sources to know how much money you will have during the week or month. It can be tough to calculate everything with student loads and part-time/seasonal income but do the best you can!
Step 2: Calculate Expenses
Calculate all your expenses – yes, every single one of them. Again, this can be difficult with school expenses but estimate your weekly and monthly spending to your best ability. You can categorize the expenses like Groceries, Entertainment, and Miscellaneous; this last one could include smaller purchases that are not made routinely.
The Government of Canada has a page on costs and incomes to include in your budget. On this page, you can find more information on what to include in your budget:
- Tuition fees
- Student fees
- Health insurance
- Books and other course materials
- Living expenses
- Living on / off campus
- Cost of food while living off campus
- Entertainment costs
- Consider rising costs
- Sources of income
- Student credit cards
- Tax deductions and tax credits for students
You have now created the foundation of your budget! Now that you have everything listed, it is time to investigate ways to minimize costs. It is crucial to figure out what you want vs what you need, what is essential and what can be eliminated or reduced.
You can also look over your actual costs and investigate ways of reducing some of the costs by doing things such as using cold water when washing the dishes and doing laundry and using LED light bulbs.
Thanks to technology, we don’t have to take out a notepad and calculator to make our budgeting lists. Many free budgeting apps allow you to automatically connect bank accounts, debit, and credit cards to track your finances.
In addition, most apps automatically categorize your spending so you can see which areas you spend the most, for example, groceries or restaurants. Apps also keep track of your income so you can see how much you are spending compared to how much money is coming in.
Transportation: Public, Walking, Biking
If you live in an area with accessible public transportation, utilizing it can help you avoid costs such as fuel, maintenance, and insurance. Walking and biking are also great alternatives that keep you fit and healthy.
Groceries and Meal-Prepping
Food prices have increased significantly over the years because of inflation, meaning eating out has become more expensive. Preparing your meals and meal can help you save on food and time.
Meal prepping is when you prepare whole meals ahead of time. You can find quick, simple recipes to make either through google or on social media like Pinterest or TikTok! Finding recipes, you can meal prep can help you save time and offers a quick on-the-go option.
Going out for drinks with friends or going to clubs can blow through your weekly paychecks. To save money, keep these activities to a minimum and try other low-cost hobbies like:
- Going to the gym
- University/college clubs
- Local/school sports leagues
- Going for walks
Many businesses like grocery stores offer discounts to university or college students, especially for companies that require monthly fees like:
- Amazon Prime
- Apple Music
Grocery stores close to universities, like Sobeys and Atlantic Superstore, also offer discounts on Tuesdays if you have your school ID! Sobeys offers 10% off on Tuesdays, and Superstore offers 10% back as points to your optimum card. Electronic stores like apple, gym memberships, and bank accounts also often offer student pricing.
Your Future Finances
After creating your budget, take your time getting used to it and make any adjustments if necessary. Eventually, once you finalize your budget to fit your lifestyle and needs, you can begin tracking future finances. So, if there were something you wanted to save for, then this would be the perfect time to plan that out.
This way, you can see when you’ll be tight on money and when you will have more available. This also allows you to be prepared when money is tight so you can find ways to manage your money better.
Use a realistic budget when planning for future spending since it impacts you financially in the long term. Soon, you will make assumptions about your annual income and expenses to plan for future investments. Now is the best time to get started!