A new school year is quickly approaching and, for some, that means moving away from home for the first time. The excitement and anticipation of a new year also brings new responsibilities like finances, which are extremely important to stay ahead of. To make everything easier to manage, we have compiled a list of budgeting tips for students away from home during school year.
Have an Emergency Fund
Before you move out, spend some time saving money that you will only use when you really need it. Having this extra money on hand can save you in future months when you may not have the money to pay rent or if you encounter an unexpected expense. Regardless of what you may encounter, having an emergency fund you can rely on will help you avoid many financial struggles that can sometimes arise.
Skip the Morning Coffee Rush
Now that you are out in the world on your own, there may be the extra temptation to buy your morning coffee at the local cafe and socialize before class. Although this may seem like a fun and exciting way to start your day, over the school year those expenses can add up. If you were to purchase a medium coffee at Tim Horton’s every morning, you would be spending a total of $765.00 per year which could be used for other essentials in your daily life like rent or groceries. So next time you look at getting your morning caffeine fix at a coffee shop, consider making it at home instead. It’ll save you money and you won’t have to wait in line!
Make a Grocery List
On average, Canadians waste approximately 834 pounds of food per year. The Financial Post found that, per capita, Canada is one of the most wasteful countries in the world; and a lot of that food waste is from buying more than you can consume before expiration. Instead of wasting food, and thus wasting money, create a strict grocery list before you go shopping and don’t stray from it. Taking this step will ensure you only buy the items you need and it will reduce your grocery bill, helping to reduce the amount of food waste you produce.
Set Financial Goals
Simplify all of your expenses when you live on your own and set financial goals for yourself. Whether it is managing payments on a credit card or ensuring you don’t spend next month’s rent money on party supplies, setting financial goals each month will make the planning process easier, and more manageable. If you don’t know where you start, try using an app on your phone to help you out or use the traditional method of piggy banks or jars dedicated to separate expenses.
Underestimate Your Income
Although you may be aware of your actual annual income, make a point of believing you earn less when you are budgeting for the year. Taking this step will encourage you to be wiser about your spending as it will convince you that your budget is lower. It will also allow you to stretch your income to last you through the whole year and have some left over at the end to carry into the summer.
Avoid Credit Cards Where Possible
If you are new to living on your own you may be tempted to charge expenses to your credit card. As a student, however, your income might not be high enough to pay the bills on time, resulting in poor credit ratings and high interest rates. Instead of using a credit card open a student bank account. The student bank account will allow you to make unlimited transactions with no annual fees and it will help you avoid large bills with high interest rates.
Living on your own is an exciting experience and, if you learn how to budget properly, it can be rewarding and fun. Taking these steps will help you on your way to mastering the budgeting that comes with living on your own. For more ideas on how to budget, visit the Medallion Blog.