In 2002, at just 19 years old, Michael Carroll won the £9.7 million lottery jackpot.

The money was supposed to last him a lifetime.

Instead, eight years later, he went bankrupt.

You might wonder: how does this happen? How does someone go from winning the lottery to having nothing in so little time?

The reality is that if you don’t have the right financial knowledge and skills, no matter how much money you have, you’re much more likely to blow it all. Whether you’ve got £9.7 million or £1,000 - knowing how to manage your money is essential for financial wellbeing.

And when it comes down to it, student budgeting isn’t so different from budgeting lottery winnings.

In this student budgeting guide, we'll delve into the basics of budgeting, explore different budgeting styles and provide practical tips to help you take control of your finances. 🙌


The importance of budgeting for students

Before getting into how to budget as a uni student, it’s key to understand why budgeting is important.

Budgeting isn't just about making ends meet; it's about setting financial goals, having more control of your money and, ultimately, achieving financial freedom.

With tuition fees, living expenses and the occasional splurge on necessities (like coffee to stay awake during exam season), it's easy to lose track of where your money is going.

By creating a budget, you gain insight into your spending habits, identify areas where you can cut back and are able to make informed financial decisions. Learning how to budget can alleviate money worries, allowing you to focus more time and energy on your studies. 

Finding your budgeting ‘why’

To kickstart your budgeting journey, it's essential to identify your 'why.' Budgeting for the sake of it isn’t fun, but having a clear reason to create a budget can motivate you to keep going, especially when times get hard.

What are your financial goals?

Your ‘why’ can be as simple as ‘to help me get through until the end of term’. Or maybe it’s about paying off student loans, saving for a trip abroad or building up your emergency fund.

Whatever it is, having a clear sense of purpose will motivate you to stick to your budget. 

What is a typical student budget?

Defining a typical student budget isn’t easy since your budget depends on your unique financial situation. It’ll depend on whether you’re getting financial support, if you have family support, if you’re working part-time, etc.

Here's an example of an average student spending budget:

*Note: This is a snapshot of a monthly student budget from November 2023, according to Blackbullion data

Category

Average spend

Groceries

£139

Rent

£686

Public transport  £55
Eating out and takeaways £99
Broadband £59
Bars and pubs £42 
Gym and fitness £36

Utilities / energy

£171

However, students recently told us that, on average, they need £621 extra a month to feel confident they will complete their degree without falling into financial difficulties.

This means that overall, students aren’t getting enough financial support for the reality of their spending. 

Many factors are out of your control when it comes to financial support. But what you can do is try to focus on managing the money that you do have to make it last as long as possible. That’s why learning how to budget as a uni student is essential. 


The basics of student budgeting

Budgeting begins by understanding your income and expenses. You'll gain a clearer picture of your financial situation by mapping these out.

Understanding income 

Income sources while at uni may include student loans, scholarships, part-time jobs or financial support from family. 

Passive vs active income 

There are two types of income: passive and active

Active income involves direct participation in the work, where you exchange time and effort for payment, such as salaries or freelance earnings.

Passive income is a way to generate income without actively working, though it generally requires effort or spending money upfront for it to become passive. This could come from investments, rental properties or a side hustle that generates income from ads, for example.

Understanding expenses 

As a student, you’ll also have a wide range of expenses that involve money leaving your bank account.

There are three main types of expenses: 

  • Variable expenses: fluctuate month to month, such as groceries, entertainment or clothing
  • Fixed expenses: consistent over time and typically include rent and utilities
  • Discretionary expenses: non-essential purchases that may enhance your life but aren’t necessary for survival, such as eating out, travel and hobbies

Budgeting tips for students

Creating your budget as a student is slightly different than for someone working full-time.

For one, you likely don’t have a consistent income and are probably relying solely on your student loan to get by. 

Second, budgeting as a student is about making it easier to do what you’re there to do - learn. You’ll want to budget in a way that enables you to focus on your education, enjoy student life and take care of your basic needs.

Here are some tips for how to budget student loans: 

  1. Prioritise essential expenses like rent, utilities, and groceries

  2. Set realistic financial goals and regularly review your budget to stay on track

  3. Look for budget-friendly alternatives for socialising, such as hosting potluck dinners or attending free events (there are often many on campus)

  4. Learn to manage your time to successfully stay on top of your finances - money management often ends up taking a back seat when you’re stressed or struggling for time

  5. Take advantage of student discounts and deals to save money on everyday expenses

  6. Consider working part-time or freelance for additional income between student loan drops 

  7. Use a budgeting app (e.g. Money Manager app) to track your spending 

  8. Plan ahead for large expenses like rent or textbooks 

  9. Be mindful of ‘impulse purchases’, especially during times of stress 

  10. Seek support if you’re struggling financially 


How to create a student budget

So, how do you actually create a student budget?

First, everyone’s budget will be different. While you can use budgeting templates to help, you’ll want your budget to be tailored to your financial situation.

Here’s how to create a student budget in 10 steps:  

  1. Look at your spending - What do you have coming in vs going out? Begin by assessing your current spending habits and analysing your income vs expenses. Identify areas where you may be overspending or where you can cut back to better align with your financial goals.
  2. How to budget student loans? - Determine the amount you get in student loans, including any grants or scholarships, as this will form a significant part of your income while studying. Note down when you get your student loan and how long you need the money to last.
  3. Work out what additional income you have - Take stock of all sources of income, including part-time jobs and financial support from family. Consider any additional income streams that could contribute to your budget.
  4. Plan for regular, recurring expenses - List all your regular fixed expenses, such as rent and utilities.
  5. Note down your variable expenses - Identify variable expenses that fluctuate month to month, such as groceries and transport. You can estimate an average monthly amount, even though these will require some flexibility within your budget.
  6. Decide on your savings goals - Determine short- and long-term savings goals, whether that’s building an emergency fund, saving for travel or investing in your future. Allocate a portion of your income towards these goals each month.
  7. Differentiate between needs & wants - Then prioritise needs like housing, food, and transport before non-essential purchases or luxuries.
  8. Map out how long you need your money to last - Break down expenses into manageable chunks such as weekly, fortnightly or monthly budgets. This helps ensure your money lasts until your next loan drop.
  9. Use separate accounts - Consider setting up separate accounts for different purposes (e.g. one for fixed expenses, one for savings and one for non-essential spending). This can help automate your budgeting, so there’s less active planning each month.
  10. Track your spending - Keep a record of all expenses and regularly track your spending against your budget. This will help you identify any areas where you may be overspending and make adjustments accordingly to stay within your means.

Budgeting methods for students

There's no one-size-fits-all approach to budgeting. Try out these budgeting methods for students and see what works best for you. 

50/30/20 budget 

The 50/30/20 budgeting method is a straightforward approach to managing your finances that allocates your income into three categories: needs, wants and savings.

Here's how it works:

Needs (50%) - Allocate 50% of your income to essential expenses such as rent, utilities, groceries and transport. These are essential expenses for day-to-day life and can’t be easily eliminated.

Wants (30%) - Dedicate 30% of your income to non-essential spending e.g. eating out, entertainment or shopping. These expenses enhance your quality of life but aren’t essential for survival.

Savings (20%) - Reserve 20% of your income for savings and financial goals, such as building an emergency fund, saving for retirement or investing in long-term dreams.

Start by calculating your monthly income and dividing it into these three categories. Track your spending regularly to ensure you stay within your budgeted amounts for each category and adjust as needed to accommodate changes in your finances or priorities. 

Pay Yourself First method 

This is a simple yet effective strategy that prioritises savings by automatically setting aside a portion of your income before using money for other expenses.

Here's how it works:

  • Automate savings - Set up automatic transfers to send money from your current account to your savings as soon as you receive your income. This ensures you consistently save a portion of your income without having to rely on ‘willpower’ - which makes it much harder to save in the moment.
  • Establish savings goals - Determine your financial goals and the amount you want to save each month. You can adjust as you go if you find you’re unable to save that amount and need more for your everyday needs.
  • Budget with what's left - After setting aside savings, allocate the remaining funds toward essential expenses and non-essential spending. By paying yourself first, you won’t have to stress about saving at the end of the month when you may have less money. Think - out of sight, out of mind. 

The Envelope System budget

This is a cash-based budgeting method - but can also be done via savings pots - that involves dividing your cash into different envelopes labelled with specific spending categories. While having physical cash may feel a little old-school, it can help for those who are more visual with how they learn.

Here's how to implement it:

  • Allocate cash - Determine your budgeted amounts for various spending categories, such as groceries, entertainment and transport. Then, withdraw that amount of cash for each category.
  • Label envelopes - Label each envelope with the name of the spending category and the budgeted amount. For example, you might have envelopes labelled ‘Groceries - £150’ and ‘Rent - £700.’
  • Use cash for expenses - When making purchases, use cash from that envelope for each category. Once an envelope is empty, you can’t spend any more money in that category until the next budgeting period.
  • Track spending - Keep track of your spending by recording each transaction and the amount spent in the corresponding envelope. This helps you stay accountable and avoid overspending.

The Envelope System budget isn’t for everyone - but it’s most effective for people who struggle with overspending or have difficulty sticking to a budget.

The Zero-Based budget

The Zero-Based budgeting method involves dividing every pound of your income into specific categories, with the goal of ensuring that your income minus expenses equals zero.

Here's how to implement it:

  • List income and expenses - Start by listing all sources of income and all expenses for the budgeting period.
  • Assign every pound - Allocate your income to various expense categories until you've accounted for every pound. This means that your income minus expenses should equal zero, leaving no money unassigned.
  • Adjust as you go - If your expenses exceed your income, you'll need to adjust your budget or try to find ways to increase your income (e.g. through part-time work). Or, if you have leftover funds after budgeting for all expenses, you could put more into your savings. 

The Zero-Based budgeting method encourages you to be intentional and proactive with your money, so that every pound has a purpose. 💪


Student budgeting tools and apps

Another budgeting method for students is to use a student budgeting app. While some may prefer the old-fashioned pen-and-paper method of budgeting, an app can help automate most of the budgeting process for you.

For example, the Blackbullion Money Manager app allows you to:

  • Consolidate all your accounts in one place
  • Track your spending automatically
  • Create personalised spending categories
  • Earn rewards for taking control of your finances

Plus it's completely free to use!

Download the app here. 

You can also use various online tools, such as our spending snapshot, to gain a bigger picture of where your money is going.

If budgeting becomes another chore on the never-ending to-do list, it’s much more likely you’ll struggle and won’t be able to stay on top of it. That’s why finding an efficient student budgeting app can help you take control of your financial future.


Budgeting for emergencies & unexpected situations 

Breaking your laptop or needing repairs on your car aren’t just annoyances - they can cause real financial (and life) stress.

That’s why having savings in an emergency or rainy day fund can provide a financial safety net for those moments you need it most. 

What is an emergency fund/rainy day fund?

An emergency fund or rainy day fund is a type of savings pot that you set aside for an unexpected situation. This could be a laptop breaking, a medical emergency that you need to pay for or fixing something in your flat, for example. 

Money isn’t everything but, if you know your costs are covered when faced with an emergency, it can make all the difference to your peace of mind. An emergency fund allows you to focus on dealing with the important stuff instead of stressing about your finances.

How to build an emergency/rainy day fund

It can be difficult to build up an emergency fund as a student, but here are a few tips to get started:

  1. Set a savings goal - Determine how much you want to save for your emergency fund. Financial experts often recommend saving at least three to six months' worth of living expenses to cover any unexpected costs that might come up.
  2. Create a budget - Review your income and expenses to identify areas where you can cut back so you can allocate enough towards savings.
  3. Automate savings - Set up automatic transfers from your current account to your savings account each month - this way it’s out of sight, out of mind. Treat your emergency fund savings as a non-negotiable recurring expense, just like paying bills or rent.
  4. Start small - If saving a significant amount seems daunting, start small and gradually increase your savings contributions over time. Even saving a small amount each month can add up and help you reach your goal. 

Strategies for handling unexpected financial challenges

It’s important to have an emergency fund in place, but sometimes the situation can go beyond what your savings can cover.

When something unexpected happens, take these steps to manage the situation: 

  1. Assess the situation - Determine what needs to be paid immediately and what you may need over the long term.
  2. Look for financial support - There may be financial assistance that can help you during an unexpected situation, such as a hardship fund.
  3. Seek professional support - If you're struggling to manage unexpected financial challenges, seek advice from Student Services, the NHS or a non-profit like StepChange or Student Minds

Budgeting for different student lifestyles

You’ll have different budgeting needs depending on whether you’re a full-time student, part-time student, commuter student or a student with dependants.    

Budgeting tips for all students

Here are a few budgeting tips for all students: 

  • Take advantage of student discounts - You can find student discounts on everything from textbooks to transport. Check out sites like Student Beans, UNiDAYS, TOTUM or Easyfundraising
  • Make the most of campus resources - On-campus resources like the library, gym or students’ union are often included in your tuition fees and can help you save money.
  • Meal plan options - Consider purchasing a meal plan offered by your uni or college. Meal plans can help you save money on food expenses - and it can be one less thing to have to think about during exam season.

Budgeting tips for part-time students

If you’re a part-time student, you may also be working alongside your degree. Here are some tips to help you budget: 

  • Time management - If you’re balancing work and study, good time management skills are essential. Create a schedule that prioritises time for both work and study. 
  • Find flexible work - If you’re not already working but are looking for a job, try finding something flexible alongside your studies. This could be freelance work, service industry jobs or on-campus jobs.

Check out more tips to make money as a student here.

Budgeting tips for commuter students

If you’re a commuter student, there may be additional expenses involved with your university or college experience. Here are some budgeting tips:

  • Transport discounts - Take advantage of student transport discounts like the Student Oyster Card or Student National Rail Card (if you’re a mature student aged 26 or over you can still get the 16-25 Railcard for each year you’re in full-time education). 
  • Meal prepping - Meal prepping will be your saving grace when commuting. Buying food out when you’re on campus all day can be expensive. Try meal prepping on the weekend or setting eating out goals for yourself - limit to once a week, for example.
  • Budget your transport costs - You can try to anticipate travel expenses associated with commuting to and from campus by creating a budget. If you’re driving, budget for fuel costs and parking fees; if you’re taking public transport, determine your monthly expenditure so you know how much you’re going to spend over the course of your studies.

Learn more about budgeting as a commuter student.

Budgeting tips for students with dependants

If you’re a student with dependants, you can also look into various grants to help with finances while you’re studying. 

Childcare grants

If you're a student with children, the government's Childcare Grant can provide financial support to help cover the cost of registered childcare services, such as nurseries or childminders.

Eligibility criteria and the amount you can receive depend on factors like your household income and the number of children you have.

Parents' learning allowance

This is designed for students with dependant children, providing financial support to help with course-related expenses. It's intended to help you meet the costs associated with studying, such as books, equipment or travel.

Adult Dependants' Grant

If you have an adult dependant, such as a partner or elderly relative who relies on you financially, you may be eligible for the Adult Dependants' Grant. This grant can help with the additional financial responsibility you may have while studying.


Additional financial support

If you have a specific circumstance, you may also be eligible for additional funding beyond maintenance and tuition fee loans. These can range from disability grants to hardship funds.  There are also many scholarships available to you - be sure to check the Funding Hub.

For a comprehensive guide on the financial support available to students, check out our funding guide.

Like anything, student budgeting is a skill that can be developed over time. Ultimately, budgeting helps you gain insight into your spending habits, so you can better manage your finances - and live a better life. 🙌

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