Personal budgeting basics: getting your finances in order

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Many students begin the road to independence upon commencing university. Part of this change is taking on new responsibilities—especially financial ones. Whether you’re working two jobs to pay for your tuition and housing or still living with your parents and receiving a monthly allowance, you make monetary decisions every day of your life. These choices can influence the state of your finances years into the future.

Due to increasing tuition fees, it is difficult for students to support themselves, and the ease with which students may acquire credit cards makes it all the more probable that they will accumulate potentially crippling debt. In the Bank of Montreal’s 2012 Student Survey, more students ranked paying for their education as their top source of stress, rather than the stress of succeeding academically or finding a job after graduation. Although just hearing the word ‘budget’ may make most McGillians cringe, personal budgeting is essential for a fiscally responsible life.

No matter what budgeting format you choose, planning a budget comes down to the same basics of estimating, prioritizing, and persistence. The first step is to estimate your total pool of monetary resources—for example, from a job, student loans, and parental assistance like Registered Education Savings Plans (RESPs). Then calculate your total costs, starting with known ones such as rent and tuition, and moving on to other living expenses like groceries, transportation, and entertainment. These costs can then be prioritized—ideally allocating more for necessary costs and savings for the future, and fewer for bar tabs.

Although this may sound difficult and intimidating, there are fortunately plenty of resources available to help students manage their finances. One valuable tool is The Frugal Scholar Program, which is run by McGill’s Scholarships and Student Aid Office. This program provides financial guidance for students and advice on how to be money-wise. The website provides a step-by-step explanation for how you can plan your budge for both your year and the entire duration of your education at McGill.

If you’re interested in technology, there are also numerous other budgeting tools available online and for mobile devices. The Financial Consumer Agency of Canada (FCAC) has a free budget calculator that creates downloadable summary reports and Excel spreadsheets. Another free online option is the website Mint.com, which connects information from all of your bank accounts together, tracks spending and payments, sets up budgets, and identifies financial goals and potential ways to increase savings. You can access your account from a computer or with the smartphone app.

Living on a budget takes some practice and the hardest part is sticking to it. It can be so easy to just pull out some plastic to pay for a round of drinks or cab to Upper Rez when it’s -20oC without considering the consequences. Beyond having self-restraint from over-spending, it’s also prudent to record spending to ensure that you’re staying within your budget. Doing so allows you to reap the benefits of being able to see where to cut back on spending, or if there’s an opportunity to increase savings.

The school year is just beginning, making now the perfect time to plan out a budget before all your summer earnings are spent on alcohol, new shoes, and overpriced groceries. Here’s to a new, fiscally responsible school year!