Budgeting and Money Management
Budgeting is essential to keep spending under control and is the single most important money management skill.
The main reason that people get into financial difficulty is that they don’t budget properly. It may sound very boring but it really is the best way to keep your finances on track and avoid getting into debt. You can then make the most of any surplus by investing the money!
Budgeting gives you an accurate picture of your money situation and makes it possible to make limited resources go a long way. It can also help you identify certain areas where you are spending too much. Ideally, it will show you (and your parents/partner/bank manager) that you are handling your money wisely. If you do not have enough money to cover your costs, you can seek advice about how to rectify the situation.
Budgeting tips
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Download our Budget Planner or Forecaster.
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Start by listing all your income and get this into a monthly or weekly figure, whichever you prefer to work with - the forecaster is split into months and you only need to input your funding or income as you receive it.
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The Forecaster is interactive and hyperlinks and comments attached to items listed under income and expenditure, use these to help you to budget better
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Can you increase your income through part-time work? Have you claimed all the funding available to you - you may wish to discuss this with a Student Adviser.
Expenditure
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The things you spend money on can be divided into three phases: past, present and future.
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When thinking about your expenditure start by listing your survival costs - the things you must pay for; rent, household bills, food etc. With what money is left over consider your lifestyle costs - the things you want but do not need!
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However the amount of money you have available to spend now can be limited by having to pay for the past, this includes essential services such as utilities. If you have any priority debts to pay this will reduce how much money you have to pay for your current needs and wants.
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You should also plan a little for the future - short term costs such as birthdays and seasonal holidays, rainy days and holidays. Long-term you may be thinking about a car or a house, these plans may be limited whilst you are studying but you should be aware of them and avoid unneccessary credit as this will put this plans off for longer when you graduate.
Eight simple rules to balance your budget
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Consider how often the expenditure happens and work out each expenditure to a weekly or monthly figure (please note a calendar month bill is not simply 4 weekly)
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Review bank statements and receipts, have you thought of everything? If you are not sure try using a spending diary or Credit Actions Spendometer
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Don’t count things more than once; it is possible some types of spending overlap into different groups make sure you count it once only.
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Overestimate don’t underestimate! And be honest with yourself
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Be consistent - is it just your expenditure or the families use the same rule throughout
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Always make allowances for miscellaneous expenditure, one offs and emergencies
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Are you getting value for money? Review how much you spend on things - can you get this item/service cheaper elsewhere.
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Thoroughly double check when you finish. One small error can make a big difference.