Being in charge of your own finances and ensuring that you don’t overspend can be an intimidating task, especially when you’re first starting out in the ‘real world.’ Everyone knows that you’re supposed to keep your spending in check by following a budget, but what does that actually look like? There is more than one type of budget and what works for one person might not work for someone else. So here is how to choose the right student budget for you, to ensure that you have plenty of savings and don’t have to deal with too many money worries.
Zero Based
A zero-based budget is based around the principle that all your money in a given month will go somewhere. Because of this, you want to keep tabs on every single transaction until you get to 0, which means all your money is accounted for. In other words, you’re not just budgeting your expenses, but you’re budgeting everything, including savings. This helps you keep your money in perspective.
Backwards Budget
If you think you’ll benefit from thinking ahead, the backwards budget might be the right student budget for you. The backwards or reverse budget is a method where savings come first. You take your full income, and then set aside the amount you want to save at the beginning of the month. That way, you won’t have to worry about dipping into your reserves later on. Out of sight, out of mind, and you’ll be thankful for it later.
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Spending First
The opposite of the backwards budget is a spending first budget. This method only works if your spending is comfortably below your earning. Instead of putting your savings away, you just spend money on what you need every month and put away whatever you have left over. It doesn’t require too much planning ahead, so this could be the right student budget for you if you’re a seat-of-your-pants kind of person.
50/30/20
The 50/30/20 budget is among the most popular for a reason. It’s a fairly straightforward breakdown, and it gives you a clearcut roadmap every month. 50% of your earnings go to needs, such as housing and food, 30% goes to wants, and the final 20% goes into savings. By dividing your wants and needs, you’re able to give yourself an ‘allowance’ for impulse purchases and things you don’t need, so you don’t feel guilty about spending on them.
Values Based
If none of the other budgets sound right, the right student budget for you might be one of your own design. The final method is a personalised budget based on what you value most. For example, if traveling is important to you, you may choose to allocate more of your budget to that and less toward other items on your list. Or if entertainment is important to you, you might prioritise that.
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