Managing your finances as a student can be challenging, especially if it’s your first time handling money independently. However, creating and sticking to a student budget is essential for making your money last and avoiding unnecessary stress. Here’s a step-by-step guide to help you set up a budget, track your spending, and stick to it.
Updated: 23 Jan 2025
It’s easy to feel like budgeting is boring. We get it, no-one likes to feel like they can’t enjoy little luxuries from time to time. But in a world of limited funds, making an achievable budget can bring you many valuable benefits.
Maximise your funds: By allocating money to essentials first, you know exactly how much expendable income is available, and can use it to the fullest without that uneasy feeling of “can I actually afford this?”
Plan for emergencies: A clear budget allows you to set aside money for unexpected expenses. Whether you’re replacing a lost phone or booking a spur-of-the-moment weekend trip with new mates, you’ll be glad that you can just say yes, and get on with it.
Avoid anxiety: Prolonged financial stress is awful. It can literally make you ill. Being in control of your finances can help give you the peace of mind needed to feel confident, rest efficiently, and focus on your studies where it matters.
Budgeting doesn’t have to feel restrictive. Instead, think of it as giving yourself financial freedom and autonomy.
Start by calculating your total monthly income. Include student loans, parental donations, part-time job wages, and any bursaries or scholarships you may have secured. These figures give you boundaries within which to design your budget structure. Keep in mind that these funds will likely arrive in your account at different times during the month, so keep track of when you can expect these amounts and make sure your expenses match up.
Next, list your expenses. These typically fall into two categories:
Fixed costs: Things like rent, bills, and subscriptions. These are nice reliable, expectable elements of your budget. They are easy to predict, and simple to account for, and unless you are making long-distance phone calls to premium rate numbers, there shouldn’t be too many surprises.
Variable costs: These are the tricky ones. They are more inconsistent, although equally necessary, and can include things like groceries, entertainment, clothes, and course materials. For example, a birthday dinner followed by a big night out has the potential to throw you off your weekly (or monthly) budget, so these are the ones to watch.
Let’s look at an example:
In a month, you receive a student loan allowance of £850. Your part-time job adds £350, and your parents send you £100 for good measure.
Your total monthly income is £1,300.
Now, you know for sure what your fixed costs are going to be, so subtract these from your monthly income first.
Let’s say your rent is £600 per month, and your bills cost a further £100. Your travel card and monthly subscriptions total an additional £175.
Your total monthly fixed costs are £875.
Therefore, the amount left over to allocate to variable costs is (£1,300-£875) = £425
How you choose to divide this is up to you, but it could look something like this:
Groceries: £150
Eating out: £50
Clothes/Shopping: £50
Socialising: £100
Savings: £75
Total: £425
This budget gives you feasible boundaries for you to live within your means, while affording you enough savings to be prepared for unexpected costs. With a simple structure like this, you are turning your variable costs into more predictable fixed costs, while allowing yourself to spend freely within each category.
It’s a digital world, and modern tools make it easy for you to track spending. Most student banks offer their own budgeting tools, and user-friendly apps like Monzo or Revolut can even automatically categorise expenses, as well as allowing you to rapidly convert between currencies. A spreadsheet is also good option, and Google Sheets or Excel has more than enough features for you to design a custom tracking sheet that works perfectly for your needs.
Consistency is key, so whether it’s a coffee or a big purchase, be sure to include it in your records. Set a weekly review, and spend five to ten minutes looking over your expenses to check in on how you’re doing, but do yourself a favour and don’t schedule this for Sunday morning!
Sticking to a budget isn’t always easy, and occasionally you will have to forgive yourself for splurging. However, establishing good habits doesn’t take as long as you think, and will drastically improve your organisation and wellbeing. Here are three tips to help you succeed.
Set realistic limits: £50 per month for groceries? Sadly, that’s pretty unlikely. Avoid setting overly strict budgets that are impossible to maintain, and leave room for occasional treats.
Plan ahead wherever possible: Some costs like train fares or event tickets are time-sensitive, so being organised and buying early bird tickets will save you money in the long run.
Use cash where possible for variable costs: But it’s a digital world—yes, I know we just said that, but it can be difficult to visualise budgets when it’s all just numbers on a screen. If you’re struggling to stay within budget, then withdraw a set amount of cash for the month’s spending on groceries or socialising—when it’s gone, it’s gone.
Budgeting is an essential skill that brings significant short-term and long-term rewards. By understanding your income, using tools to track spending, and sticking to realistic goals, you can enjoy your university experience without unnecessary financial stress. Have fun out there, and invest in the future version of yourself.