13.3: Managing your Income and Expenses

Create a Personal Budget

A budget is a plan that helps you manage your money. It helps you figure out how much money you get, spend, and save. Making a budget can help you balance your income with your savings and expenses. It guides your spending to help you reach your financial goals. To learn how to make a personal budget and stick to it, visit Making a Budget from the Financial Consumer Agency of Canada.

Apps like PocketGuard, Monarch, or Excel spreadsheets can simplify budgeting and track spending. Regular review of the budget is important to ensure you stay on track, and you will need to adjust your spending if unexpected expenses arise or your priorities change.

A budget is especially important if you:

• don’t know where your money is going
• don’t save regularly
• have problems paying off your debts
• feel overwhelmed by your finances
• feel like you’re not in control of your finances
• want to make the most of your money
• are planning for a major purchase or a life event

Making a budget can help you:

• set spending limits
• find ways to pay down your debts
• reduce costs and save more
• live within your means
• reduce financial stress
• have more money for things that are important to you
• feel in control of your finances

Below are a few suggestions on how college students can more effectively manage their money while furthering their education:

• Set up a self-enforced budget and manage your credit card responsibly
• Utilize meal plans or make your own meals rather than eating out, and share expenses with roommates
• Investigate economic ways to buy essential items and supplies
• Distinguish between essential and non-essential purchases
• Take advantage of scholarships and grant awards
• Investigate off-campus housing and whether or not you can share a place with another student
• Get a paid, part-time job if your schedule permits, but don’t work full-time hours; otherwise, you may not have time to keep up with your studies
• Take advantage of free (on campus) or low-priced (Value Village, Salvation Army) options for food, clothing, and furniture
• If asked, request practical gifts for your birthday and other special occasions
• Buy used books when possible and resell them when you are finished with them, or check out the library to see if you can borrow a course textbook
• Investigate whether or not you can remain on your parents’ health insurance plan instead of purchasing health insurance yourself

Creating and using a budget is not just for those who need to closely monitor their cash flows from month to month because money is tight. Almost everyone can benefit from budgeting.^[1] Building the right college student budget for your situation can help you stay on track for your financial life after graduation. Plus, learning to build and maintain a budget is an important skill to carry with you for the rest of your life. If you aren’t sure how to create the perfect college budget that works for you, then check out this free budgeting course. It will walk you through the steps of building a budget that actually sticks.^[2]

Reduce Monthly Bills

Here are a few suggestions to help you reduce your monthly bills:

• Get a cheaper mobile phone plan.
• Pay your bills on time so you are not charged interest fees.
• Cancel unnecessary or unused subscriptions.
• Share rent, utilities, and grocery expenses with a roommate.
• Carpool to reduce travel costs, take transit, or buy less expensive auto insurance.
• Reduce, reuse, recycle. You can buy gently used clothing, furniture, bicycles, automobiles, and just about anything. Don’t throw out leftover food; make a new recipe from it.
• Seek student discounts such as no-fee bank accounts, 20% off at specific retailers with student cards, etc.
• Use the money-back on your credit cards or customer loyalty points from various vendors whenever you can.
• Cook more often so you don’t need to eat out or order in. Eat out as a reward, not as a rule. A sandwich or leftovers from home can be just as tasty and can save you $5 to $15 a day!
• Get a student scholarship or grant.
• Eliminate impulse buying.

Curb Impulse Spending

Here are a few suggestions to help you curb impulse spending:

• Build a budget that follows the 50-30-20 rule for budgeting.
• Take $100 out of the bank and don’t spend a penny more.
• Make a list of what you plan to buy over a week, a month, and stick to it. Seeing your planned purchases can help you stay on track.
• Eat before you grocery shop. You don’t want to be hungry and pick up a bunch of snack food while grocery shopping.
• Sleep on it. Wait a day or two and think about whether or not you really need the item or really want the item. Often, if you wait a few days, you will determine it is not needed, or you will find a better deal somewhere else.

You’ll probably be surprised at how much of your money can quickly become somebody else’s money. If, for example, you spend $3 every day for one cup of coffee at a coffee shop, you’re laying out nearly $1,100 a year just for coffee. If you use your ATM card at a bank other than your own, you’ll probably be charged a fee that can be as high as $3.  If you do this even twice per month, that adds up to $72 per year in ATM fees. To avoid ATM fees, choose a bank with no ATM fees or a bank that refunds ATM fees for student accounts. You might also consider spending on your credit card, then paying off the balance each month.  To do this, you must be self-disciplined in not charging more than you have saved for. This way, you won’t pay so many bank fees, nor will you pay interest on your credit card balances. Planning ahead, reading the fine print, and making sure you’re knowledgeable about the banking services you’re using are the three most important things everyone who is looking for free banking should do.^[3]

You may or may not be among the Canadian consumers, reported by Statistics Canada, who purchased more than 2 billion litres of beer (equivalent to 3.7 bottles of beer per week per person of legal drinking age) during the  2021–2022 fiscal year, or purchased one or more of the over 2 billion Tim Hortons coffees sold each year.^[4][5] You may or may not be one of the 40% percent of Canadian consumers who regret holiday-spending bills.^[6] Bottom line — if, at age 28, you have a good education and a good job, a $60,000 income, and $70,000 in debt — by no means an implausible scenario—there’s a very good reason why you should think hard about controlling your debt: your level of indebtedness will be a key factor in your ability—or inability—to reach your longer-term financial goals, such as home ownership, a dream trip, and, perhaps most importantly, a reasonably comfortable retirement.

Media Attributions

“Woman Wearing Black Blazer Holding Shopping Bags” by Andrea Piacquadio, used under the Pexels license.