Financial Planning and Resources for Students

Your Budget

This information is intended to help you manage your personal budget. An inability to plan your own budget as a student can have a significant impact on scholastic performance. No one should have to worry about paying the rent when studying for exams!

The principles of personal budgeting are very simple and involve, among other things, balancing expenses and revenues. What is more difficult, however, is having enough foresight through careful planning and self-discipline to avoid personal budgeting traps. This information is intended as a tool to help you prepare or review your budget.

Personal budgeting encourages you to look at your goals and circumstances in order to allow you to adopt a lifestyle which realistically corresponds to your resources. If you haven’t started working on your personal budget, don’t wait any longer and begin now.

1 - What period should it cover?

Choose a period sufficiently long to allow you to anticipate problems and opportunities well in advance and to give you a chance to react to them. For university students, we recommend from May to April (12 months). By incorporating your summer earnings, this budget will provide a more realistic picture of the resources available to you at the beginning of the school year.

2 - Can you update your budget?

Absolutely! Your budget is an instrument that helps you make decisions about your own circumstances. Therefore, you should drive your budget and not be driven by it! Having said this, you shouldn’t find yourself changing your budget every week or every month. If that’s the case, your projected expenses and/or anticipated resources are probably not realistic enough. It could also mean that your plans are fine, but you have problems disciplining yourself in following your plan. Make certain you are willing and able to live with all the implications that result from your budget. You should monitor your budget regularly so as not to unduly deviate from it. If, however, the work earnings you expected didn’t materialize or you had to pay fees for an extra course, then do revise your budget to see if your expectations and lifestyle ought to change given your new circumstances. Don’t make the mistake of thinking you will just get by. The accumulation of small changes can have a big impact on your budget.

3 - Where has the money gone?

Know your spending habits. Some people scrounge every penny, while others are impulse buyers. Some are very careful with certain budget items like food, but will be careless on other things like entertainment. An interesting exercise to help you get to know your spending habits is to maintain a week long spending diary showing every penny you spend. This is certainly a tedious exercise; however, it usually is quite revealing. When reviewing your spending diary, ask yourself how you could have reduced your expenses. Did you incur expenses that were not planned for in your budget? Use the Weekly Spending Diary (worksheet #1) to help you monitor your expenses. Make copies of it and repeat the exercise from time to time to see how you are doing.

Download Worksheet #1 [MS-Excel Format] [pdf]

Understanding Cash Flow

By cash flow, we mean the movement of cash into, through and out of your budget. What is particular about student budgets, is that the cash flow is often irregular, especially as it applies to large items such as tuition and fees.

It’s one thing to balance your annual budget on paper; it’s quite another matter to ensure you have enough money to pay for your expenses each month of the year. Here again, planning is important to make sure you have enough cash on hand to meet your expenses as they arise. If a healthy balance in your bank account is too much of a temptation to use money earmarked for the future, then try putting your money into a savings account and have monthly regular automatic transfers of funds made into a checking account from which you will manage your budget. This way you will have the added benefit of a high interest return from your savings account, and will diminish the temptation of withdrawing more funds than you can afford.

Buying on Credit

Credit conjures many images in people’s minds. Some view it as an evil thing that must be avoided, while others are enthusiastic about it and think their credit limit is a target for which they should aim! We must be careful not to let credit become the method of attaining material gain before considering the need, the value, and means of purchasing goods or services.

When thinking of using credit, we must not lose sight of the total picture. That picture includes: the purchase price and the credit cost. Frequently these days, goods and services are advertised for their monthly payment as opposed to the whole unit cost. The consumer’s attention is drawn to the easy monthly payment, while no attention is drawn to the bigger view of the total cost. Since credit is a service you purchase, you should be a wise buyer and shop around for the best value.

Credit does not create wealth in your budget; what it does simply is give you opportunity and extra time to make a purchase. Of course, you are paying for the opportunity and time by way of interest charges.

A good rule of thumb as a student is that if you can’t pay off in full, within 30 days, any goods purchased on credit, then don’t buy them. Your financial situation is precarious enough that you don’t need an unplanned debt in your personal budget. Planned debt, on the other hand (i.e. computer loan, car loan, etc.), should be built into your budget. Student loans are also a form of planned debt.

Preparing Your Budget

Before completing the Personal Budget Monthly Worksheet (worksheet #2), make 12 photocopies to give yourself a year’s worth of worksheets and save the original for future years. Remember, our budget year begins May 1,and ends on April 30.

Download Worksheet #2 [MS-Excel Format] [pdf]

Determining Your Revenue

Not all revenue sources shown on the spreadsheet will apply to you. We have also left a blank revenue line so you may add income sources we may have omitted. If you are forecasting income, be conservative and as accurate as possible. If you need help forecasting your student financial aid, consult the Financial Aid and Awards Office for assistance.

Determining Your Expenses

Expenses must be reported monthly; therefore, weekly expenses must be annualized by multiplying by 52 and dividing by 12. For example, if you spend $50 per week on food, the calculation is as follows: ($50 food/week x 52 weeks) ÷ 12 months = $216/month.

Tuition Fees and Books

Consult the University Fee Payment Schedule available at the Tuition and Fees Website to find out what portion of your fees are due in which month. A conservative estimate of the cost of books and materials in the first month of each semester for a full course load would be $690.

Reviewing the Year

Once you have determined your total monthly revenue, expenses and balance figures for every month, simply report on the Personal Budget Worksheet Annual Summary (worksheet #3. By analysing the annual summary, you will be able to observe two important points. The first is the bottom line: that is, do you have sufficient annual revenue to meet all your expenses? If your budget worksheet reflects a deficit, review your budget with a view to reduce expenses and if possible, increase revenues. If after reviewing your situation you are still in a deficit, then consult the Financial Aid and Awards Office to review your budget. If after careful review of your budget no changes can be made, then you should review some of your objectives along with an advisor.

The second important observation will be your monthly balance. A negative monthly balance, or negative cash flow is a sign that you should review that month’s activities. Your Annual Summary may balance, but you could still experience problems in a given month. Knowing in advance that you will have a month with a negative balance gives you enough time to see if any expenses can be deferred during that month, or if a cumulative monthly surplus held at that time can be used to absorb that month’s shortfall.

Download Worksheet #3 [MS-Excel Format] [pdf]

Other Resources

CANLEARN - Canada's one-stop resource for the information and interactive planning tools you need to explore learning and education opportunities, research occupations, developing learning strategies, and create the financial plans to achieve your goals. (External Link)

If you require any further assistance, feel free to contact the Financial Aid and Awards Office.