How to budget on a student income

Does the word budget make you cringe? If you think it's just for politicians, businesses or buying a house then think again. If you are on a student income or on an apprentice wage and are struggling to make ends meet, then it's time to learn some serious budgeting techniques to get you on your way to financial stability. Budgeting means getting your money priorities in order. To get your game on, you need to work out:

  • Money coming in
  • Money going out
  • When it happens
  • That's it? Basically, but let's drill down to a few more details. Are you like the rest of us and enjoy a splurge every now and then? Budgeting doesn't mean you can't ever treat yourself, it's about balancing your expenses so you can achieve goals.

    The key to a successful budget is being honest and realistic. Be honest about where your money goes. Most people underestimate what they spend. A little bit extra here and there can quickly amount to a lot. A budget can really highlight this so you can balance your spending.

    Apps and other useful stuff

    There are plenty of tools around that can just about do all the budgeting for you. Free online programs and apps include Money Help and Moneysmart. Some budgeting apps, such as Pocketbook, can synchronise with your bank account and alert you of upcoming, paid and missed bills, and keep you on track for spending and saving.

    If you have Microsoft Office, then you should find a template for budgets in Excel. iMacs also have a built-in template for creating budgets.

    Divvy up your dollars

    Once you have worked out what you are spending your money on, and what you can realistically afford, set your own realistic spending limit to each category on a weekly, fortnightly or monthly basis. How you set your budget also depends on when you get paid. If you get paid per fortnight, you could allocate a fortnightly budget for food, public transport, and for Fido the bow-legged sausage dog. Try not to spend more than you allocated for each category.

    Want vs Need

    Every day you are faced with hundreds of food, clothing, activity and life experience choices. Try and work out what is a want and what is a need. Before you make a purchase, ask yourself: ‘do I really need it'?

    Work out whether you really need to get a product brand new, if you can get it secondhand, or if a cheaper alternative will do the job. Op shops, garage sales and sites like Gumtree and Trading Post can help you find some goods on the cheap.

    Be careful of emotional purchases; shopping when tired, hungry or upset can result in splurging on something expensive that you don't really need – anything from a new outfit to a holiday. Don't go grocery shopping when hungry, and take a shopping list to avoid impulse buying at the supermarket.

    From little things big things grow

    Frothy frappucinos, cold-pressed juices and smashed avo breakfasts are popular right now. We love ‘em. And it's okay to indulge every now and then, just keep an eye on how often you are getting takeout, lunches and coffees, and add up the cost over a period of time. If you are buying two coffees per day at $4 each, then you are spending about $3,000 per year just on coffees. Maybe that's a starting point…

    The roof over your head

    A rule of thumb developed by someone somewhere, says that if you can limit your rent to a third of your income, then you are doing okay. While this can prove to be a challenge in some locations, see if you can create some options for yourself. Consider reducing your rent by moving to a cheaper area even if it means a longer commute, or living with relatives until you have completed your training.

    Hidden benefits

    Often reining in your spending will have added benefits: a longer commute on public transport may allow you to catch up on some study on the journey home. Buying less takeout can bring added health benefits; and not buying everything new reduces your environmental footprint.

    Piggy bank

    Put aside 10% of your income each time you get paid in any way. If it's $10, then save $1. If it's $500, then save $50. Put it away into a savings account the minute you get it and forget about it temporarily. Check on it a year later and be pleasantly surprised. This little trick will also help you save money for any unexpected expenses, like having to pay for Fido's trip to vet.

    Focus. Do it.

    Little by little every day, watch your money, save, and your budgeting goals will come true. Only you can make it happen.