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Budgeting Guide: How to set a budget

WHAT is a budget? Why do you need one? Where do you start? Ernest Lee answers these questions and more in this guide to managing your money – especially for international students.

"A budget is a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows."

Leaving home to further your studies can be a very challenging milestone for a lot of students. International students often encounter many new challenges overseas and are suddenly burdened with responsibilities they never had before and also privileges that they are not used to having – such as being away from the watchful eyes of parents or family members.


Now that the semester has well and truly begun, it’s easy to predict where your hard-earned cash will be heading. And the amount you’ll be handing over for the essentials, like textbooks and rent, to groceries and public transport, is likely going to be a pretty big figure.

Now that you have a lot more freedom, don’t forget that shopping, eating out and going out will also easily and quickly deplete your bank account if you’re not careful.

If there’s no planning around where your money is going, you might easily find yourself running into a shortage of funds and having to turn to your parents back home overseas for emergency loans.

With all of these money issues to consider, it’s not surprising that tertiary students are one of the most financially stressed groups in Australia. But there’s no better time than the present to change how you spend your money.

Step 1: Ask yourself – Have you ever set a budget?
If you answered “yes”, keep it up! That is already more than half of the battle won.
For those who have never set a budget, fret not, because you are not alone. According to ME Bank’s latest Household Financial Comfort Report, 40% of students only sometimes set a budget and 19% never set a one. The first step is to recognise the need to set a monthly budget for your expenditure as it is important to independently manage your finances – especially when you’re a student.


Step 2: Self-discipline and commitment
Did you know that 44% of students only sometimes or never stay within their monthly budget? Even if monthly budgeting of expenses has become a habit for you, it is good to commit and practice self-discipline to curb unnecessary spending.

It may be a little difficult in the beginning, but as time passes, you will find managing your finances will become much easier. One tip that you may find useful is saying “no” to things you don’t need and saying “yes” only to the essentials like rent, groceries, and public transport.

Ask yourself when you’re about to dip into your savings account; Do I need this, or do I just want it? Your answer will indicate whether the purchase is really worth pulling your wallet out for.

Step 3: Don’t know where to start? Help is on hand!
Students who have never set a budget and are not sure how to start can now look for help – on the internet. Simply key in the phrase “budget calculator” in your favourite search engine or go to any of your respective banks’ websites. Input the information they require and a rough estimate of your monthly essentials and a budget calculator will generate a budget that is customised just for you.

There are even smartphone apps that you can download that allow you to track your expenses and how near or far you are from your budget plan. It is so simple and convenient to set a budget nowadays, so there should be no reason not to!

Step 4: Start thinking about banking products and credit cards
If you have followed the three previous steps then you might want to take it to the next level. One way is to get a good savings account.

These can do a whole lot more than just store your money because it can control your daily expenses, which could help prevent you from overspending.

ME Bank’s General Manager of Asset Products Luke Easton offers a few tips.
“Look out for good deals on your banking products. Banking products can be another way of saving money, which can help students earn interest in their saving accounts,” said Mr Easton.

On credit cards, Mr Easton disagrees with the preconceived notion many people have that credit cards are bad and accumulate debts.

“Credit cards can be a smart alternative to substitute cash flow, if used properly,” he said.
“[But] 41% of students only sometimes or never pay off their credit card in full each month. So remember to pay off your debts at every billing cycle of your credit cards to avoid paying more interest and accumulating debts.”

If you have any extra idea for setting a budget? Share with us in the comments box below!

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