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How to budget your income as a student

By ATB Financial 1 October 2020 4 min read

These days, there are many ways to finance your post-secondary education: part-time or summer jobs, student loans, RESPs, scholarships and bursaries. Many students rely on a combination of these sources of income to support themselves while they’re in school.

No matter how you’re paying your tuition and living expenses, here’s how to make the most of your income while you’re a student and set yourself up for a higher level of financial security in the future.


Step 1: Assess your immediate expenses

Post-secondary life can be stressful, and it might be tempting to focus on just surviving to the end of the semester (hello caffeine, my old friend). However, life doesn’t end after final exams, and it’s important to take the bigger picture into account when you’re making a plan for your finances.

Start by adding up your basic expenses for the whole year. Remember to include tuition, books and supplies, groceries, recreation, transportation, rent, phone and internet, etc. We’ll call this number your immediate expenses. (Keep the breakdown of expenses by category handy for step 3.)

If you don’t already have a budgeting worksheet, we’ve created one for you! You can access it here.

While many students have a pretty clear idea of what their cost of living and studying will be on a year-by-year basis, life is full of left turns and surprises. That’s why it’s important to build up an emergency fund to act as a financial cushion during a time when you want to be able to focus on your studies. The rule of thumb is to set aside enough to cover your basic expenses for between three and six months.


Step 2: Assess your current income

Now that you know your immediate expenses and how much money you need to create a financial cushion, it’s time to figure out how much money you’re currently bringing in.

Start with your earnings from any paid work you plan on doing during the year. Add any savings you or your parents have set aside for your education (including but not limited to savings in an RESP). Add any scholarships, bursaries or government financial assistance you expect to receive. We’ll call this number your current income.

If your current income isn’t enough to cover your immediate expenses and set up an emergency fund, it may be time to apply for a government student loan or a student line of credit.

If your current income exceeds the amount you need to cover your immediate expenses and set up an emergency fund, it may be time to think about investing the extra amount.


Step 3: Put your budget to work

Ok, so you know how much you need and how much you have to work with. Now it’s time to figure out how to make your budget work in real life.

Don't forget RESP and student loan funds

Make sure that you account for any money that’s going directly from your RESP or a government student loan to your educational institution. Even though it may not feel like “real” money because it never passes through your personal accounts, it’s still part of your big-picture calculation.

Manage different income streams

If you have income from several different sources—some of it coming in bi-weekly or monthly, some every semester, some only once a year—it can feel difficult to keep track of what’s coming in and what’s going out.

One great strategy is to open up different savings accounts for different types of expenses. For instance, you could have one account for tuition, one for groceries, one for rent, one for transportation or vehicle expenses, and one for your emergency fund. Every time you receive funds from one of your income sources, you can take a look at your account balances and your breakdown of expenses for the year and allocate the money accordingly.

Pick the right account

Make sure any savings accounts you open up for budgeting purposes are not subject to monthly fees. Because most savings accounts have limits on the number of debit transactions you can perform without being charged transaction fees, it’s also wise to keep a chequing account with unlimited transactions that you can transfer money into when you need to make purchases.

Earn extra as you spend 

No matter how much or how hard you want to save, spending is essential, especially on campus. But, when you do have to spend, look for opportunities to get the most out of your hard earned money.  There are banking products and apps that offer the feature of earning while you spend. 

Invest the rest

Dividing up your income as you receive it makes it easier to see where your money is going, but it also makes it easier to notice when you have a little extra that might be best invested in a tax-free savings account (TFSA). Once you’ve covered your basic costs of living, saving a portion of everything you bring in is a good habit to get into, even as a student. Later on down the road, the money you’ve invested can be put toward paying off your student loans, putting a down payment on a house or a vehicle, or giving you some time to figure out your next steps post-graduation.

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