Student budget: Where should you start?

31 August 2023 by National Bank
Photo of two students walking

Post-secondary education comes with new expenses, particularly if you have to move away from home to be closer to your school. To help you navigate these new financial responsibilities, create a student budget that takes all your expenses and income into account. Follow these steps to get started.

Identify all your expenses

Think of your budget as a helpful tool. The more realistic you are in identifying your expenses, the easier it will be to manage your finances. You’re better off budgeting too much than too little. That way, you won’t have to crunch the numbers at the end of the month.

We suggest you review your budget at least once a year (more, if possible) to avoid unpleasant surprises.

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Good to know: Underestimating “unnecessary” or non-essential expenses is a common mistake, especially when it comes to your first budget. The best way to avoid this is to readjust your budget every month so as not to repeat mistakes from one month to the next.

There are two main categories of expenses:

  • Those that recur every month, known as fixed expenses.
  • Those that vary, known as variable expenses.

By adding up these two categories, you’ll get a good idea of your total expenses. Your rent, for example, is a fixed expense. Your budget for eating out is considered a variable expense.

Start by recording your tuition fees and study-related expenses

This is where you include all expenses directly related to your studies, i.e., tuition fees, administrative fees, student association fees and school supply costs.

Tuition fees will vary depending on your level of study (CEGEP in Quebec, bachelor’s, master’s, doctorate), the province in which you study, your residency status and the courses you take. They’re determined by governments.

Administrative fees vary between schools and generally cover the costs of services offered to the student community, such as libraries and registration.

Student association fees help finance the student association(s) you join. Most of the time, these fees are compulsory. Non-mandatory expenses such as health and dental insurance may also be added.

It’s possible to opt out of certain fees in your student account. For example, if you’re covered by your parents’ health and dental insurance, it could be better to take advantage of it than to pay for your school’s insurance. Compare their respective advantages when making your choice.

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Good to know: The government offers a tax credit for students that’s equal to 15% of the amount paid in tuition fees in a year. You can claim it on your income tax return each year or accumulate your tuition fees from year to year for future use.

Read our article to find out more about this helpful tax credit:
Get a tax credit for your tuition fees

Add your housing costs

Starting post-secondary studies often means moving into your first apartment or student residence. This big step comes with many expenses.

First of all, you need to consider expenses related to the move, such as renting a truck and buying your furniture and appliances. These are irregular expenses. You also need to think about the fixed expenses you’ll have to pay each month:

Do you have a subscription to a streaming platform? Include this amount in your budget too.

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Tip: You can reduce your housing costs by opting for shared accommodation or a student residence. In the first case, you’ll share costs with others, and in the second, you’ll generally pay a lower rent that normally includes all utilities.

Don’t forget about your food budget

Whether you’re living in a student residence or an apartment, you need to think about food. In student residences, it can sometimes be cheaper to eat at the cafeteria. To learn more, check out the meal plans and costs on your school’s website.

If you live in an apartment, you’ll need to set aside a fair amount for groceries, which are one of the biggest expenses. You can reduce your grocery bill by:

  • Planning your meals using flyers with weekly specials
  • Shopping at less expensive grocery stores
  • Subscribing to “ugly” vegetable baskets (which also helps reduce food waste!) 
  • Using a points card

Wondering how much to set aside for your grocery budget? 
Check out our article to learn more about food budgeting and saving tips.

What about transportation?

You also need to consider travel costs. If you use public transit, add the fares to your budget. The good news? You may benefit from reduced fares while you’re a student.

Do you own a car? You need to calculate the cost of maintenance, gas, parking and car insurance. And don’t forget the costs associated with operating your vehicle, such as your driver’s licence and registration. Even if you own a car, taking public transit regularly can help you save money.   

Do you need to include student loan payments?

If you don’t need financial assistance for your studies, you can move on to the next step.

If you have a loan, it’s important to think about repaying it. You may have to make payments, sometimes to cover the interest at least, while you’re still studying. If so, add this amount to your budget.

Include a budget for personal activities

Thursday happy hours with classmates, Saturday dinners out or movie nights on Tuesday are all activities that benefit your mental health.

By allocating a monthly amount to these expenses, you’ll avoid the frustration of having to turn down invitations from friends and family. The most important thing is to be able to treat yourself while respecting your financial limits.

The more you get into the habit of budgeting for these expenses – which are necessary indulgences – the better you’ll know how to manage them.

Do you pay for most of your outings with your credit card to earn points?
Check out our article to learn all about credit cards, interest and rewards.

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Tip: Many establishments offer student discounts. Make sure to check them out and plan your outings accordingly.

Last but not least: Start building an emergency fund 

Did you drop your cell phone down the toilet? Has your used dryer broken down? Your latte ended up on your computer at the end of a session? Because the unexpected can strike at any time, it’s important to set aside a small amount of money, what’s called a financial cushion, to help get you through. The key is getting into the habit of saving small amounts, like $10 here and there, on a regular basis.

Your emergency fund not only allows you to cover unforeseen expenses, but also those that don’t come up every month, such as renewing your driver’s licence or taking a weekend camping trip to get some fresh air. These are known as irregular or annual expenses.

Add up all your income

By calculating all your net income (after tax deductions), you’ll be able to assess if your income will cover your expenses.

This includes your salary, tips (if applicable), student financial assistance and even the allowance you may receive from your parents or another member of your family.

Start by calculating the amount of student financial assistance you receive

There are many sources of student financial assistance, including the Canada Student Financial Assistance Program (external link), the Quebec government’s Student Financial Assistance (external link) and a host of scholarships.

Wondering which financial assistance options you qualify for?
Check out our article to learn more about all the possibilities available to you.

Add income from your student job

Summer is often the time when students work to raise funds for the rest of the year.

If you’d rather have steady income, consider taking a part-time job.

Friendly advice: To maintain good grades, limit yourself to 15 hours of work a week.

Analyze your budget

Once you’ve identified and added up all your expenses and income, you need to subtract your expenses from your income. This will show you whether your current income is sufficient to cover all your expenses.

A spreadsheet or mobile app will help you avoid calculation errors – our calculator is also a great tool to use. Simply replace some of the suggested expense items with those mentioned in this article.

Once you’ve established your monthly budget, it’s important to follow up regularly by integrating and adjusting your expenses and income. Reviewing your weekly and daily expenses will give you a better idea of the budget you can devote to small luxuries.

Why not set aside Sunday mornings for your budget reviews? By reserving time in your weekly schedule, you’re more likely to be diligent with follow-ups.

Tip: To help you keep an eye on your finances and avoid unnecessary fees, sign up for National Bank’s email alerts. These warn you when your account balance falls below an amount you can set yourself. You can also activate alerts when the available credit on your card or line of credit falls below a set limit.

If your analysis leads you to believe your expenses are too high, there are many ways to save.
Read our article to discover 35 money-saving tips.

Would you like to discuss this with us? Contact your National Bank advisor or your wealth advisor at National Bank Financial. Don't have an advisor?

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