Managing Your Money for School
You're planning on becoming a Poor Student, so you better start by lowering your expectations about what life will be like while you study. You'll eat a lot of low-cost food. You'll wear your clothes until they are threadbare. You'll live in crowded, if not bug-infested, quarters. Hey, that's the life of the poor student. And maybe it'll help you focus on what you don't want for the rest of your life.
If you're going to school to par-taay, to drink your face off, to take six years to get a three-year degree, scram now. You're wasting your time on my site because you won't find anything I say interesting.
School is serious business. It's very expensive. It takes a ton of effort (or you're not doing it right), and it's not forever. Short-term pain for long-term gain, that's school. If you do it right, you'll graduate knowing what you need to make a life for yourself and your family. You'll have learned to be frugal. You'll have learned to prioritize. And you'll be strong, because you had some rough spots, but you got through them.
That's not to say that there aren't lots of people who graduate from school without the good sense God gave a goose. I've met them. People still living off their parents. People who prioritize the car they drive over the food they put on the table for their children. People who are still KIDS. Through years of college, trade-school, university, they succeeded in NOT GROWING UP. Poor things. Poor things the people who will have to live with them.
But that's not you. You've decided to do this whole post-secondary thing right. You've made plans for a career. You've applied for scholarships. You've been saving for tuition. Now it's time to learn how to manage your money.
Since you're potentially going to be dealing with lump-sum amounts (summer-work savings, a scholarship, RESP money, a bursary, or a gift from your parents) and you'll have lump-sum expenses (tuition, books/supplies/first & last months rent), you need to figure out those first, so you know how much you have left to plug into your Student Cashflow Worksheet, which will be your monthly budget document.
Managing Your Lump-Sum Money
The first thing you need to do is complete the Managing Your Lump-Sum Money Worksheet. You'll enter all the money you'll have from your summer employment, scholarships, bursaries, RESPs, gifts from parents/grands and loans, and any other money you can scrounge. Next, you'll enter the money you know you're going to need to set aside to cover tuition, books and supplies, traveling to school at the beginning of the year, and home again at the end, the costs to cover your first/last month's rent (or dormitory expenses), and your first grocery shop or Student Food Plan. There are a few "other" lines so you can add anything else that's specific to your circumstances.
The next step is to enter an amount you'll be setting aside for emergencies. DO NOT SKIP THIS STEP. Emergencies happen. That's a part of life. Being financially prepared for them gives you options in terms of how you deal with them. Being unprepared is immature and short-sighted. I recommend at least $500.
Having done all that, you'll have an amount that's left (hopefully) that can be divided by the 10 months you're at school, to give you a monthly income amount. You'll be using that number on the Student Cashflow Worksheet.
The Student Cashflow Worksheet
The Student Cash Flow Worksheet is divided into 24 columns. The blue columns are your planned spending for the month, and the white are for what you actually spend each month. Why so many columns? Well, when you're living so close to the financial line, you need to account for every penny. And since your spending will vary by month, so should your plan.
I've also colour-coded the actual categories to help you prioritize. I've found that people have a difficult time telling the difference between WANTS and NEEDS, so I've attempted to take the guesswork out of it for you.
The stuff in green makes up your Essential Expenses - money you need to spend to keep body and soul together. You can spend more or less in a particular category, but you cannot spend more money than you have.
The stuff in orange makes up your Tier Two Needs/Wants. You won't die if you can't buy a new winter coat, but it'd sure be nicer than the ratty one you're now parading around in. Ditto cable and a cell phone. I consider Internet an essential, but think you're pretty dumb if you have time to waste on TV. You should be studying, working, or out with your friends, in that order.
You can customize the budget to your circumstances and geographic region. For example, your transportation costs may be low because you live on or near campus (which is why I've put them in orange). But if you've chosen to live at home and drive to school, your housing costs will be lower and your transportation costs higher (and should be green because they've become an Essential Expense), and you'll need to budget for things like car maintenance, payments, gas, insurance, and the like.
Ultimately, your goal is to spend the least amount you can so that you can focus on school (instead of work), have some fun, and get out without a truckload of debt.
So here's how you use the Student Cashflow Worksheet. Having completed the Managing Your Lump-Sum Money Worksheet, you know how much you'll have a month that you can use to cover living expenses. If it isn't enough to meet your Essential Expenses and have SOME fun, you'll need to get a job to make up the difference. If your parents are helping you monthly, you can put in that amount too.
Now add in how much you think you'll make that month at your job. Not sure? Well, skip this step and go on to your expenses, and that'll tell you how much you NEED to make.
Next, enter your Irregular Expenses. You'll have to know which months you're traveling home (or elsewhere) so you can put it in the appropriate month's planned column. Ditto your trip to the dentist to have your teeth cleaned and, if you have any money, a card for Mother's Day. (So this will also act as a reminder of special events when you look across the gift row. I'm not charging you extra for that!)
Then enter your Monthly Expenses, the ones in green first. Once you've done that, you can look to the bottom and if you have money left, you can allocate some to your orange expenses, to satisfy some of your WANTS.
Remember, you can't go into the negative with your budget.
If you've waited until completing your expenses to see how much you have to make a month, you may have been overly generous with your spending. Remember, every hour you have to work is an hour you can't spend studying or having fun with your friends.
This is where your ability to prioritize will show itself. If you HAVE to have money to buy new clothes - because you must have a Completely Coordinated Study Outfit- that'll cost you in terms of the energy you'll have to lay out to make more money. But that's your choice. You're a grown-up now, so you can to make the decision. If focusing on the School Experience - learning, laughing, creating fabulous memories - is more your bag, then you'll be willing to forgo some of the STUFF so you have more TIME.
Of course, there are things you can do to mitigate the amount you're going to have to spend while you're at school. And that's what we'll look at next.