How To Make A Budget As A Student

Many university students in Botswana struggle with financial literacy, which includes budgeting, investing, and saving, as well as the science behind how money works. Some may say this struggle is caused by the limited amount, which is true, but without a proper budget, money disappears.

Budgeting tips are essential for navigating college life and making the most of the college experience.

TThe Botswana Journal of Business published  an article in 2015, “An Analysis of the Relationship between Demographic Characteristics and Financial Practices among Tertiary Students in Botswana.”

The article below shows that indeed, many university students lack financial literacy, regardless of demographics. In the article, the lack of recording of percentages or numbers suggests that the financial literacy is extremely low.

Here is why I saw it fit to share this information with you

As a business student, I have been learning about budgeting, accounting, and economics prior to coming to university. All that relates to money, and I have realized that effective budgeting can greatly enhance your overall college experience by reducing financial stress and allowing you to focus on your studies and personal growth.

Before jumping to the ways to make a budget to prepare, you should understand which category you fall under with the student loan grant offered by the Department of Tertiary Education Financing (DTEF).

In this blog, I’ll share with you how to prepare a budget for university, just as I did when I found out I had been admitted to study a BA (Hons) Business Management. Budgeting tips can help you manage the unique challenges of college life, from handling expenses like housing and food to balancing academics and social activities.

What Is A Budget?

A student budget is an estimate of income and expenditure for a set period, specifically tailored to help students manage their finances during their studies. The income may be a fixed one, and then a list of items on how you are going to spend it.

Assessing Your Financial Situation

Assessing your financial situation is a crucial first step in creating a college budget that truly works for you as a university student in Botswana. Before you can manage your money effectively, you need a clear picture of where your money comes from and where it goes each month.

Start by calculating your total monthly income, which includes all your income sources, such as financial aid, family contributions, and any part-time job earnings. Many college students find it helpful to use a budgeting app or a simple spreadsheet to keep track of their income and expenses for a more accurate budget.

Next, make a comprehensive list of all your expenses. Be sure to include fixed expenses like student fees, tuition, rent, and food, as well as variable expenses such as entertainment, transportation, and personal care. Don’t forget to plan for unexpected expenses medical bills, emergency travel, or urgent repairs can pop up at any time.

That’s why it’s smart to set aside a portion of your monthly income in an emergency fund or savings account. Even saving just 10% to 20% of your income can help you cover unexpected costs and avoid credit card debt.

As a college student, finding ways to save money can make a significant impact on your financial situation. Take advantage of student discounts whenever possible, buy used textbooks instead of new ones, and opt for home-cooked meals over eating out. Many colleges also offer free or low-cost resources like financial counseling and budgeting workshops to help students manage their finances and reach their financial goals.

To get a better understanding of your spending habits, review your bank statements and track your spending over a few months. This will help you spot patterns and identify areas where you might be overspending or can cut back.

Redirect any extra money you save toward your financial goals, whether that’s paying off student loans, building up your emergency savings, or saving for a spring break trip.

What To Consider When Making A Budget

Effective money management is a crucial part of budgeting.

• Transparency- you need to list all items and activities that you engage in that need money no matter how small.
• Income- you need to make a list of your sources of income, from part time work, allowance, then find the net balance.
• Track your expenses- make a list of items, services that subtract from your net balance alongside with the prices of each item.
• Categorise needs vs wants- you need to prioritise those that are essential first e.g. toiletry.
• Savings/investing- this enables that even after completion you have money to sustain you. Savings is more of paying yourself.

There are several factors that can influence a student's budget, such as location, lifestyle, rent, entertainment, and personal choices.

How to Make a Budget in 4 Steps

Step 1:  Know Sources Of Income

Money can come from various sources, so you must know yours. To have a well-functioning budget, sources of income must be dependable. Make a list of income e.g. parent contribution, allowance. Calculate your total income by adding up all these sources—understanding your total income is essential before you start budgeting.

Without an income, it is not possible to make a budget, or you cannot estimate how much it would be.

Step 2: List Of Expenses And Categorise Them

When certain types of goods are grouped together, they have a collective at which they are referred to as. Make a list of things you will be purchasing as well as their prices, this helps you know where money is being directed to. Be sure to include key expenses such as housing and food, as these are major parts of your budget. If moving to a different area example Maun to Gaborone, meat is more expensive in Gaborone than Maun. So, this list should have an estimate price of that area. Living expenses, including rent, utilities, and food, should be considered when making your budget, as these costs can make up a significant portion of your spending.

Once you have listed all that you will be buying, categorise into their respective group names, example bread, milk fall under grocery. While on categorising the is the boarder way of doing it, group into two sets: fixed and variable expense. Fixed expenses are those that do not change or have the same amount e.g. tuition then the variable expense is vice versa of fixed. Monthly expenses should be tracked and categorized to help you manage your budget more effectively.

Since the variable expenses change from time to time your budget should be changing according to those new prices. These expenses may vary depending on factors such as your location, lifestyle, and personal choices, so it is important to review and adjust your budget regularly.

Before directing the money to where it is meant to go, always remember you need to pay yourself first. The reason being without you the is no way you will be able to make a budget, so taking care of you and appreciating yourself through saving and investing.

Savings, investment, and rainy days/ emergencies should be your best friends.

Step 3: Maintain Your Budget  

Regular checks on prices of goods and services and adjusting where need be are essential. Make it a habit to review your monthly budget to ensure you are staying on track and managing your expenses effectively. For the first try do not be so hard on yourself if you slip, those slips teach us to get up and move forward.

Sometimes you may already have certain goods that overlap to the next period, I would use it for investing and savings because it comes with interest.

Step 4: Put It To Work 

A budget should be made months before heading to school; this helps you understand those numbers. I know sometimes they look scary because they are big, but if you prepare before, you will understand. One other thing: do not create a budget the day you get hold of that money—make it before. When planning, consider your budget for the entire school year, not just for a single month, so you can allocate your income and expenses more effectively over time.

It is better if you make one for the whole month. If you have an expensive taste, tone it down because you are not working. Every month, we try to reduce expenses.

The most important thing when balancing your income and expenses is to do so before going into the store. Make sure that when subtracting expenses from income, it does not give you a negative.

An Example of a Budget

Below is an example of things you can add in your budget.

When planning your finances, it’s important to know how much money you will need each month to cover all your expenses. For example, let’s look at a scenario where your net income is BWP 1,520.00 (as offered for on-campus Students’ allowance):

The are many resources you can use to make a budget, pen & paper (writing down), Excel, Monefy App. 

How To Stick To That Budget

When preparing a budget, it is imperative to make it a SMART budget. SMART stands for Specific, Measurable, Achievable, Realistic, and Time-bound. This will be helpful, so you do not feel overwhelmed. At first, it may be difficult, but with time and practice, it is easier.

• Budget friend- find someone who shares the same goal as you, a person who can hold you accountable.
• Review – after buying anything, scratch it out for that specific time.
• Avoid having cash at hand- if you are easily wooed by cash, it is better to have it in your bank card (for students, it does not charge for every swipe, so it is a win).

By sticking to your budget and managing your finances responsibly, you can also start to build credit as a student, which is important for your financial future.

Understanding Sponsorship, Allowance, Tuition When In University

Although attending university is exciting, it is essential to understand that DTEF sponsorship is a loan. It is not free money, both school fees and allowance.

The table below will help you understand, even when choosing a course. So, even after completing school, you will still owe the government the budgeted amount.

Source: Department of Tertiary Education Financing

Conclusion 

Start by assessing the amount of money you currently have and see how it fits into your daily life. Remember, money should not control you; instead, you should direct where it goes. Otherwise, it can quickly vanish without a trace. Money touches every aspect of what you do, so managing it wisely is essential.

If you ever find yourself struggling, don't hesitate to reach out to the volunteers or mentors at Lehikeng, or other organizations available to support you. Remember, as the saying goes, "A journey of a thousand miles begins with a single step."

At Lehikeng, we are always here and ready to help you on your financial journey.

Frequently Asked Questions (FAQs)

What is the first step in making a budget as a student?

The first step is to identify and list all your sources of income, such as allowances, part-time work, family contributions, financial aid, and any other income. This helps you determine your total monthly income to plan your budget effectively.

How do I categorize my expenses in a budget?

Expenses should be categorized into fixed expenses (those that stay the same each month like tuition and rent) and variable expenses (those that can change like groceries and entertainment). Additionally, prioritize your expenses by distinguishing needs versus wants.

Why is it important to track your spending regularly?

Tracking your spending helps you understand your spending habits, avoid unnecessary spending, and maintain a balanced budget. It also allows you to adjust your budget regularly to meet your financial goals and prepare for unexpected expenses.

What is an emergency fund and why should students have one?

An emergency fund is money set aside to cover unexpected costs such as medical bills or urgent repairs. Having an emergency fund is crucial for students to avoid financial stress and debt when unforeseen expenses arise.

How can I stick to my budget while in college?

Stick to your budget by reviewing it regularly, avoiding impulsive purchases, paying yourself first by saving, and using tools like budgeting apps or spreadsheets to track your expenses and income.

Are student loans considered income when budgeting?

Student loans are not income but financial aid that you will need to repay. When budgeting, consider loans as funds available for education expenses, but plan carefully to manage repayments after graduation. Look at the categories your program falls under when under the Botswana Government sponsorships.

How often should I update my budget?

It’s best to review and update your budget monthly or whenever there are changes in your income or expenses. This helps maintain an accurate budget that reflects your current financial situation.

Can budgeting help me save money for things like a spring break trip or other goals?

Yes, budgeting helps you allocate extra money toward savings goals, such as trips or purchases, by managing your monthly income and expenses effectively.