Creating a budget

How to come up with a workable budget

You may think that coming up with a budget is a difficult and unnecessary thing to do, but having a realistic budget in hand is absolutely crucial in ensuring that you don't run into money problems in the middle of the term when you have papers and exams you have to start worrying about.

Coming up with a budget is a fairly straightforward process. There are four general principles:

1. Set goals for yourself.
2. Create an accurate picture of where your money is coming from and where it's going.
3. Plan out where your money needs to go first and where you want it to go second.
4. Discipline yourself to stick with your plan.

See the CanLearn website for an educational savings calculator.

Here's how to create a budget in four easy steps.

Step 1: Goal setting

Effective budgeting is best achieved if you have set goals for yourself. Think of your goals as your budget's end destination. Think about career goals, personal goals and, of course, financial goals.

Your financial goals should be realistic and focus on both long term and short term targets. Normally, it's best to come up with a realistic amount you want to save by the end of the term. Usually, to figure out what that amount is, you will need to determine how much you can realistically save once all of your fixed and variable costs have been taken into account. What you're aiming for will largely be determined by the following formula:

income - expenses = potential savings

Step 2: Assessing your finances

Assessing where your money is coming from and where it is going is the next step. We recommend that you save all your financial documents like pay stubs and receipts for about a month so that you can make note of your cash inflows and outflows.

Once you've done this, organize the numbers into three categories: your income, your fixed costs and your variable costs. Your fixed costs are basically items that are paid/bought on a regular basis. Your variable costs are items that you do not purchase/pay for on a regular basis. We also recommend you organize your fixed and variable costs by priority. This will allow you to determine where your money should be directed first. Here are some examples of some fixed and variable costs and how you may wish to prioritize them.

Rent - fixed/high priority
Cable Bill - fixed/low priority

Groceries - variable/high priority
Clothes - variable/low priority

Once you have sorted out the numbers, do a bit of math and figure out if your income is enough to cover all of your costs. If you discover that your income is not enough to cover all of your necessary costs you may want to look for alternative sources of funding such as scholarships, bursaries, awards and student loans.

Once you find yourself in a situation where all of your total expenses are equal to or less than your income, then you can start planning out a budget to ration out your money.

For those of you who are coming to SFU for the first time and are unsure as to what your monthly expenses are going to be we have provided you with a realistic estimate of how much it's going to cost you to come to school each term.

Step 3: Planning with your available resources

Your budget can as be as simple or as complicated as you need it to be. For most students, we recommend you have a fairly simple and flexible budget. This will allow you to use your budget as a guideline on how you should be spending your money.

A budget chart should have two general sections: income and costs. In your income sections note down where your money is coming from on either a per term (4 months) or per month basis. Here's an example of what an SFU student's income chart might look like for a single student for one term.

Now that you've noted what funds you have coming in, it's time to figure out where it's going. When it comes to cost, prioritizing is the key to ensuring that your money is being used properly. We recommend you prioritize your costs in the following order:

1. Fixed Costs - High Priority (FH)
2. Variable Costs - High Priority (VH)
3. Fixed Costs - Low Priority (FL)
4. Variable Costs - Low Priority (VL)

Here's an example of what an SFU student's costs per term (renting with roommates) might look like.

INCOME - EXPENSES = $113 (Potential Savings/Emergency Funds)

Step 4: Motivation and discipline

The last step in the budgeting process is probably the most difficult. Stopping yourself from making unnecessary purchases can be tough when you're dealing with the stresses of being a student. This is where goal setting becomes crucial. Keeping your eye on where you want to be financially at the end of the term is a great motivational tool to ensure that you stick with your budget. As noted earlier, it's best to come up with both long term and short term savings targets. Try to remind yourself of your goals whenever you're teetering on the verge of deviating from your budget. Why not write it down somewhere so you're always reminded of what you're striving for?

However, if you find that goal-setting is not enough to keep you motivated, how about creating a reward system instead? Why not use the potential savings that will come from sticking to your budget to buy yourself a new CD or that little piece of jewelry you've had your eye on?

Giving yourself a reward for achieving your savings/budgeting goals gives you something tangible to look forward to at the end of the term. So, instead of just striving for a number, you're now aiming to buy something for yourself.

Money-saving tips

1. It's always better to overestimate your costs rather than underestimate them. You never know when prices for necessities will increase or when unexpected costs may arise.
2. Grocery shop with a list and stick with it so you don't buy expensive impulse items that may throw off your budget. Whenever possible try to buy in bulk. Remember it's usually cheaper in the long run if you buy more in the short term.
3. Get your SFU U-Pass as early as possible so you can take full advantage of the savings involved. Every eligible student is entitled to a U-Pass, which gives you a substantial discount on the cost of using the public transit system within the GVRD.
4. Join a club! There are a wide range of clubs covering a variety of interests ranging from movies to sports to writing poetry. Clubs are usually a fairly inexpensive way for you to find things to do when you're not studying and a great way to make new friends.
5. If you need a long distance telephone plan, definitely shop around to compare rates and if you're unhappy with your current provider's service/rates don't be afraid to let them know about it. You may get a better deal that way.
6. Instead of buying an agenda or an organizer, get a free student agenda from the SFSS. Get yours while they last and save a few bucks!
7. If you aren't planning to use your U-Pass and will be driving your car to school, why not consider getting a carpool pass instead? You don't have to join the parking pass lottery to get one. Just gather a group of friends who live near you and sign up. If split among three people or more, it's significantly cheaper than buying a regular B-Lot pass and it's more environmentally friendly (but it's still not as cheap as using your U-Pass to get around).
8. Instead of buying a membership at your local gym, why not use the SFU gym? It's already included in your school fees.
9. Buying lunches on campus can become very expensive very quickly. So, try to brown bag your lunch as much as possible. If you're always rushed in the morning try preparing your lunches the night before.
10. Try to buy used textbooks. Usually, you'll save at least 20% off the cost of buying new. If you can't find your books at the bookstore, you can also try searching online or searching the bulletin boards around campus for students who are looking to sell their textbooks. If you really want to save money, you may find a copy of the course textbook at the SFU Library. Be forewarned: if your professor puts the book on reserve, you'll only be able to sign out the book for a short period of time.
11. Lastly, don't play around when it comes to your studies. Pass your course the first time around. Repeating a course is not only an academic burden, but a financial one. Remember how much your class costs per unit?