Managing your student budget

Many students from Luxembourg embark on higher education abroad every year. For them, and for those staying closer to home too, this new life stage promises a first taste of freedom and independence, along with a sudden slew of responsibilities. First and foremost of these is the need to manage your own budget – a task that requires organisation and good habits.

If you’re a student getting ready to fly the nest, you’re well on your way to independence! Reaching this major and long-awaited milestone brings a sense of new-found freedom. But you’ll need to stay on budget as you rent a place, shop for what you need and organise your outgoings. Otherwise, you run the risk of eating nothing but pasta for the last two weeks of every month. Following a few simple rules can help you keep your spending under control and even save a little.

Make sure you don’t trap yourself in an overly strict budget with too many different categories.

1. Getting all your ducks in a row is the key to success

How can you keep tabs on your finances without a clear idea of your income and expenses? Getting organised is vital if you’re to avoid nasty surprises at the end of the month. Nothing beats a notebook or a purpose-made management app to help you achieve this. Often, all you have to do is draw up a detailed list with income (pocket money, student grant or salary from a student job) on one side and expenses on the other. You’ll need to list both fixed expenses like rent and subscriptions, and variable expenses such as food. For an even clearer picture, you could draw up a table for each category of expenditure: studies, housing, transport, leisure, etc. But make sure you don’t trap yourself in an overly strict budget with too many different categories.

With your budget complete, it will be easy to see what you have left over to spend on things like going out, leisure activities or shopping. We recommend keeping track and learning to manage your financial flows by going through your accounts regularly (at least once a week at the start) so you can make the right decisions. Little by little, you’ll come to understand your typical budget and feel fully in control.

2. Smart spending

Students rarely live a life of luxury – in fact, the opposite tends to be true. The best way to live within your means is to learn how to spend wisely. Adopting the right habits is vital, and there is plenty of advice out there on how to do just that. You can easily:

• • opt for communal housing to share rent costs;
  • avoid those unnecessary little expenses (a can from the vending machine or a takeaway coffee) that crop up on a daily basis and add up to a substantial sum by the end of the year;
  • buy in bulk to share costs with your housemates or avoid having to cook every day;
  • favour homemade and seasonal meals over fast food;
  • check small ads and second-hand sites;
  • take a small amount of cash with you rather than your bank card when you go out;
  • etc.

It’s important to be disciplined about your managing your budget.

One method to help you spend smartly and save money is the 50/30/20 rule, which you can adapt to the reality of a limited budget. This involves putting 50% of your income towards essentials and unavoidable expenditure, 30% towards having fun and 20% towards savings and investment. There’s no need to be too strict about this breakdown, but it’s important to be disciplined about managing your budget.

Another method is Zero-Based Budgeting, where you have to justify each expense in every budgeting period, even if you spent the same in a previous period. This approach involves fine-tuning your budget so you know exactly what you’re spending each month on fixed and variable items, as well as what you’re saving. Of course, having a clear overview of your finances is a prerequisite.

3. No amount saved is too small

Whether you live alone or in shared accommodation with other students, shopping around is a great way to make savings. We strongly recommend keeping a close eye on the rates you’re being charged for things like your internet access and phone line and comparing tariffs from different providers to find the best deal. There’s nothing to stop you from switching suppliers to save money. But before you enter into a new contract, check you’re not signing up for a longer period than you need. And remember to read all the small print thoroughly before signing on the dotted line.

There are also plenty of small ways to save money in a wide array of areas. Try them out for yourself!

4. A helping hand to fund your studies

Whether or not your parents are supporting you, tuition costs can eat up a sizeable chunk of your budget. Luckily, State subsidies are available to offer relief to eligible students. And, if you want, you can also take out a study grant or a State-backed loan. While it probably won’t cover all of your needs, it’s worth noting that Luxembourg is particularly generous in this regard.

Getting your finances in order is easier and more inspiring when you have a specific goal in mind.

5. Make the most of your assets by investing or saving

Getting your finances in order is easier and more inspiring when you have a specific goal in mind – provided that it’s realistic! Is there a dream holiday, trip abroad or purchase you can’t afford just yet? Have you thought about putting a little bit of money aside on a regular basis (once your fixed costs are paid) rather than spending it? If you save a small amount each month, you’ll gradually build up a sum you can use to make that dream a reality or cover an unexpected expense.

Once you’ve set your goals, think about which are short term (like replacing your computer) and which are long term (like travelling around Europe). Then consider how to achieve the former without completely jeopardising the latter.

Building up an emergency fund is a great way to ensure you can cover unexpected expenses, too. You can pay in at a pace that suits you; for example, you might save part of your pocket money or grant each month, or even invest a larger sum such as a birthday gift.

If you’re ready for a new adventure, investing is also a good way to build up a financial buffer for yourself. Your banker can help you take this step. To prepare for your meeting with them, it’s a good idea to familiarise yourself with the investment pyramid.

6. Turn your banker into your closest ally

You’re never too young to seek guidance or ask for help. Whether you need advice on day-to-day financial management or where to invest some of your money, your bank is a great place to turn. You may find answers to most of your questions via the online tools provided, but you can also arrange an appointment with an expert who can handle specific requests quickly and help you achieve your goals.

Certain banks extend a helping hand to students aged 18-29 by offering preferential packages. These could include remote account access, cards that are free or cheaper for a set time period, a rent guarantee solution, and much more.