The other day I went to the mall to kill time. After 40 minutes of being picky and bugging sales associates, I fell in love with this black shirt only to realize that I forgot my wallet at my work desk. The bus was due in half an hour, and I had a swimming lesson in almost an hour. Before leaving for the mall I had decided to eat something right there so my muscles don’t fail me in the pool. After some fishing I was able to find a loonie, a quarter, a nickel and a dime, thanks to CnD shopping. So there I was – hungry with $1.40 in my pocket. I decided to get a chocolate or something to distract my brain. A kiosk sold chocolates for $1.39 which + tax was out of my range. Looking at all the other deals priced at $2.45 and $3.97 I wished that I hadn’t forgotten my wallet – all I could think of was that this is twice or even thrice of what I can afford right now.
At some point during this disappointing shopping trip I started thinking what if it actually happens – what if most of time I am unable to buy things as lavishly as I do now or eat out whenever I feel like it? Living at home during the study terms and two of my co-op terms I didn’t have to worry about money too much. But like every student right after paying that 4-figure tuition fee, end of study terms, when my job pays less than the previous one or times when I am trying to save for something are always hard. And so I decided to write my own guidelines for budgeting.
Don’t consider these as set in stone. People have different lifestyles; some of these tips might work for you while some won’t.
- Write it down! Rather than just keeping a mental note of everything a written summary will give you a more clear and discrete view of what you are doing with your money. Sticking to my very basic computer skill Ms Excel has been my favourite for years. If you are more tech savvy you can use those fancy mobile phone applications too.
- Write the budget for a foreseeable period of time. As a student, 8 months has always worked for me – 4 months of co-op when the inflows are greater than the outflows and 4 months of study term when the outflows are more than the inflows. Also keep in mind things that you need to save for in advance e.g. two consecutive study terms or even your grad trip
- Keep track of your major sources of income such as payroll, scholarships, contribution from parents etc separately. In addition to bookkeeping it also helps to foresee future fluctuations and their overall effect and thus plan accordingly.
Similarly assemble your expenses into categories such as food, clothes, rent etc. Categorize such that your predicted expenses in each category are somewhat constant over certain periods of time. It makes it easier to observe if the expenses alternate by too much between weeks or months. Be careful to not have too many categories or you’ll lose the main focus.
- If you notice that you are overshooting, try to cut down in all areas such as eating out, clothes etc rather than just one aspect, because chances are you will end up justifying that expenditure to yourself.
- Budget reasonably! If you underestimate your expenses to keep yourself under check you will end up spending more anyways, marring the whole point of budgeting. If you overestimate you will provide yourself room to overspend.
- Always keep a cushion for unexpected expenses such as health, sudden travel, etc.
- If you are having problems controlling your urge to shop and/or spend, write down the individual expenses as they are incurred such as July 9th, Morty’s Wings for $20.22. Looking at the monthly bank statement sometimes I really can’t justify some expenses and think before I do the same thing again.
- Believe it or not, using cash instead of debit or credit card helps. Whether you spend $5 or $200 when you pay by a card it is just a swipe. Actually counting the bills makes you question if the item is actually worth what you are spending.
- A couple of times instead of listing my expenses and then deriving my savings I first thought of a certain amount to be saved and then backtracked my expenses from there. This is no hard and fast rule; if the expenses you work out don’t seem reasonable change them.
Budgeting does not mean living hand-to-mouth and drooling on seeing others spend. It is to keep a balanced lifestyle; the not-so-recent recession and its effects are still being felt by a lot of us and we should at least try to be prepared for the worst. Treat yourself for your good behavior and stay within limits. Happy Budgeting!!!
The original article published in the Iron Warrior on July 7, 2010 can be found here