Budgeting

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Open our Budget Calculator.

Preparing a budget

Coping with limited resources is a common problem faced by students. While you can never predict some expenses - such as for unexpected medical treatment or car repairs - preparing a budget will help you to plan for your regular and ongoing expenses. It can also allow you to “save” for unexpected items and large bills by setting up an emergency fund. Bottom line is your budget needs to work for you. If it doesn’t take into account your actual needs it will not be a useful tool in balancing your income with your expenses.

Before you sit down to do your budget, record for a two week period (or one month if you can) all of your actual expenses when you make the purchase. This includes all of your incidental expenses, such as a magazine or can of drink. Be honest with yourself. By doing this exercise you will see where your money is actually spent. This can be quite different from where you think you spend it! This task will also show you areas where you may need to cut down your spending.

Weekly or fortnightly?

Decide whether your budget will apply for each week, each fortnight or for some other period. A fortnightly budget (as used in the budget calculator) is useful if you receive any type of benefit from Centrelink, as these are paid fortnightly. Remember to use the same time period when you are calculating expenses.

Income

Write a list of the source and amounts of income. If your income is erratic you could work out an average or estimate based on the last few weeks.

Expenses

Write down all of your usual fortnightly expenses. Use the information you gathered from listing your actual expenses to try to think of everything that you regularly spend money on.

Next consider your less frequent but known expenses such as telephone, gas and electricity bills, car insurance and semester levies. The ideal way to meet these expenses on time is to save a little each fortnight towards them. To work out how much to save calculate the total cost of such expenses for a whole year and then divide by 26 to give an approximate fortnightly cost. Use your bills from the last twelve months to help you estimate the annual costs or, if this is your first try at independent living, perhaps you could ask some friends about their costs and estimate from there.

The last calculation gives the amount that you would need to save every fortnight in order to cover your regular bills.

Checks and balances

Once you have made your calculations, write everything down clearly, under the categories of income and expenses, so that you can see how your money will be allocated each fortnight. Remember to include the fortnightly amount that you will be saving towards bills and other larger expenses such as car maintenance.

An important question at this point is - is your income at least equal to your expenses? If not, this presents a problem. Consider whether you are able to increase your income (eg by working more hours) or whether any of your costs can be reduced (eg by reducing your entertainment budget). You may need to look at your budget in terms of needs (those items that are essential such as rent and food) and wants (non-essential items). If you find that your budget includes an excess of wants, prioritise these to determine what is most important to you to include in your budget. Remember if you deprive yourself of all of your pleasures you may find that you blow your budget anyway. It is important to put in an amount for recreation – we all need a break from studying. If this amount is small you may need to explore low cost recreation options. For some ideas on low cost recreation see the Guild website www.guildonline.net or the Brisbane City Council site www.ourbrisbane.com.au.

If your income exceeds your expenses, you might like to put this "extra" money into your bill account for an emergency.

Managing your money

Even with the best of intentions, it can be difficult to make yourself leave a certain amount of money in your bank account for future bills. Some people opt for the "cookie jar" method, in which they put some money into a special container and use this for bill-paying. A difficulty with this is that it makes your savings very accessible.

Another way to manage your money is to have separate bank accounts for bills and day-to-day expenses. Designate one account to be your main operating account; then once a fortnight, transfer your "deferred expenses" amount to your bill account. The bill account balance will gradually build up so that, hopefully, you have enough money to pay bills as they come in. It is helpful if you can put in a little extra money to start it off, in case you receive a big bill (such as car insurance) early in the year.

It is useful to shop around when opening bank accounts. Some banks offer accounts with no minimum balance requirements, no basic fees, a generous number of free transactions and the capacity to transfer money between accounts over the telephone or internet (although conditions always apply).

A third option is to check with the company that you have the bill with to see if they have a Direct Debit or other payment system. Some companies (for example Energex and Origin) can take direct debits from your account on a fortnightly or monthly basis. Some phone companies have a pre paid option, not only for your mobile, but also for your home phone or an option to receive monthly bills. These options may assist you in budgeting for your bills rather than having to pay a large lump sum at the end of a 3 month billing period.

If you are having problems with paying any of your bills contact the company to whom you owe the money. Most companies are willing to negotiate a repayment that you can afford. After all, getting their money slowly is better than not getting it at all.

Be flexible

To make your budget work, you need to stick to it; however, you also need to allow for change. Make time to review your budget after a few weeks - check whether the amounts you have listed for expenses are reasonable and adjust them if necessary. You should also review your budget when your circumstances change, e.g. change in wages, new accommodation.

Repeating the exercise of recording all of your expenses can also assist in indicating to you any areas that you need to adjust in your budget. Your budget is a working document and will change as your needs change.

Remember - a budget is meant to help you to reduce stress, not create it. This page describes one way to manage your money but you need to find out what works for you. Keep working at it and you will eventually work out a budget that works for you.

For further help contact the Counselling Services to make an appointment to see the Welfare Officer.