Stick to a budget amid the Covid crisis
A recent study found that the average student in the UK is paying almost £800 per month in living costs. Against the backdrop of Covid-19, it’s even more important for students to understand the importance of budgets.
Budgeting is an essential skill in life. As a student, you’ll have a degree of independence which means that managing your own finances is a key part of the learning experience. For those of you studying business, budgeting also an important skill to develop for when you manage your own company.
With coronavirus causing uncertainty in the economy, being able to plan your own budget will help you to avoid going overdrawn or being unable to afford essential day to day outgoings like food shopping and bills.
To help you start to think about your finances and budgets, here are 5 steps to creating a budget.
1) Calculate your known income against your known expenses
Start by calculating what your guaranteed income will be. This may be from a long-term job, your student loan or maintenance grants, or another form of income. Compare the amount you’ll be earning with the amount you know you’ll need to spend, on rent, food, bills and other essentials.
2) Consider how much you have left over
By comparing your income and expenses, you can find out how much you have left over. If your expenses are more than your income, you’ll need to start by thinking of ways to reduce your expenditure. If you find your income is more than your expenditure, think about how you can save this money.
3) If you’re spending too much, find ways to reduce your outgoings
Review all of your spending, and decide where you can make savings. If you’re shopping for expensive branded food, try shopping for supermarket own brand products instead. Use vouchers and discount codes where you can – there are often specific discounts available for students. Analyse every aspect of your spending and think about whether you need to spend on certain items or services. For example, if you’re paying for a streaming service that you don’t use, cancel it. Only spend money on what you really want and need.
4) If you’re earning a lot more than you spend, look at savings accounts
If you find your income is a lot more than your expenditure, think about savings accounts. Building money up in your main current account can make it more tempting to spend on unnecessary items. Your current account is also less likely to have a strong interest rate. Look at savings accounts with good interest rates to help you protect your finances. Don’t forget to check that you can withdraw your savings easily, as you never know when you might need them.
5) Track your spending and act
Beyond bills and food, it’s easy in the 21st century, particularly with contactless technology, to be spending more than we realise. Build a spreadsheet where you can track every penny you spend, so you can keep an eye on what you’re spending. By tracking your spending, you’ll be more conscious of your purchasing decisions, and can act on unnecessary spending to save money.
These are just a few ways to get started on creating a budget. Analysing and reviewing your income and expenditure is key to running a successful business, so if you’re studying on a business course, creating your own personal budget during your student life can be a great way of putting your business cap on, and putting your financial management skills into practice.