First-year students consider many aspects of their new lives when entering into the independence of starting at varsity. What subject modules should they choose? How does their timetable work? How do they even find their classes? It is a time when self-reliance and instinct kick in. Whether they are prepared or not, university life does not wait. Students do, however, possess the power to take the reins of a student budget.
Financial writer James David Weinroth, in an article published on GetRichSlowly.org, discusses steps to plan and incorporate the perfect budget into a time-consuming and demanding lifestyle, such as that of a student. Weinroth swears by his “Four rules of budgeting”. Firstly, he suggests that budgeting is only a target. Spending will not be exact in the beginning stages of a budget. You must learn to achieve a perfect balance of money by trying to reach this target. Tumi Msiza, a second-year financial science student, says that “[he finds] it hard to stay within a budget…every student will know [a monthly allowance is] not enough.” Thus, Msiza encourages students to find a job, a potential contributor to combating the initial budgeting battle.
Weinroth’s second rule discusses how decreasing major expenses, such as choosing affordable accommodation, allows more room for entertainment and “breathing-space” in a budget. He goes further to say that you should “make plans based on real life, not how [you] wish life would be.” This entails the realistic circumstances of student spending, such as weekly coffee dates and lunches with friends. If money is spent this way on a regular basis, it must be included in a budget, explains Weinroth. Lastly, Weinroth encourages students to maintain a simple budget. By keeping it simple, it is easy to track spending that works the same way as the spender.
Financial lecturer Elize Kirsten advises that there are many elements involved in a budget. Among these are determining your exact income, including savings into your budget, determining your expenses and dividing them into wants and needs and then ensuring that all expenses are covered by the income. Kirsten goes on to add that “When one of the elements change, go back to your budget and rework [it].”
The “Balanced Money Formula” set out by Elizabeth Warren and Amelia Warren Tyagi in the book All Your Worth: The Ultimate Lifetime Money Plan details how to divide expenses in a budget, which is particularly significant in establishing a student budget. Expenses are divided into three categories: needs, savings, and wants. Needs consist of accommodation, health care, transportation, basic groceries and clothing. Savings involve emergency savings and debt repayment. Wants include all the extras: television, cell phones, vacations and clothing beyond the basics.
The “Balanced Money Formula” divides 50% of an amount to be spent on needs, at least 20% on savings and the remainder of roughly 30% on wants. These are targets to aim for in order to feel comfortable spending within a budget and to ultimately reach financial balance.
Danielle Kruger, a first-year BA student, says that she prioritises university travel expenses, such as Gautrain fares and petrol. This form of transportation is considered an essential part of the need section of student budgets for those travelling to Pretoria from far.
By dividing expenses when establishing a budget, a student will begin to feel more independent, responsible and encouraged to apply their money where it matters. “[A budget] teaches [a student] discipline and frugality,” so be economical when spending on everyday needs, encourages Msiza.
Photo: Brendan Fraser