Managing my money for young adults
Managing my money for young adults

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Managing my money for young adults

11  A budget for living away from home

In the next activity you get your first chance to try out the ‘living away from home’ facility on the budgeting app.

Earlier you explored a basic budget for living at home. Now you work with a detailed living-away-from-home budget.

The first difference is that this budget works on an annual rather than a monthly basis. This is in part because you’re now dealing with much larger sums of money, such as your maintenance loan for an entire term plus the next vacation, or your deposit for a year’s accommodation. Any poor decision making can have more drastic consequences. Using just a monthly budget when such large figures are at stake can risk overstating how well or how badly off you are. As a general rule you need to be careful when building spending that occurs irregularly (like the cost of holidays) into a monthly budget. An annual budget, encompassing a full academic year, gives you a full picture of your financial position.

The budget grid enables a fairly forensic analysis of the current year’s financial flows (Year 1) with the option of adding summary financial forecasts for the next two years (Years 2 and 3).

It can be used for anyone living away from their family home – not just students (although only students will have cash flows relating to student loans in their budgets). The year is divided into either terms or quarters to suit your circumstances. As a full-time student you are not liable to certain costs in the budget grid, for example Council Tax. Depending on your accommodation arrangements other costs such as water charges might not be payable either.

Expenditure is divided between essential spending (B) and non-essential spending (C), to provide a focus if there’s a need to make economies.

Pay attention to the net position at the bottom of the grid (income less expenditure).

If there’s an excess of expenditure over income a plan should be in place to meet the shortfall. This could mean:

  • increasing income – say by working more hours part-time
  • making spending cuts (focus on Section C spending)
  • drawing on existing savings (if you have some)
  • drawing on your bank account overdraft facility (but make sure your overdraft is authorised)
  • having a fallback if none of the above options are available or if the overdraft option is prohibitively expensive (‘Bank of Mum & Dad’?).

Activity 4  Your detailed budget grid

Timing: Allow about 20 minutes

Have a go at filling in the budget grid. You can either add your answers directly into the table or download the Word version of the detailed budget grid [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] .

 Autumn term or Quarter 1Spring term or Quarter 2Summer term or Quarter 3Summer vacation or Quarter 4Year 2Year 3
Balance from previous period
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Income
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Student loans
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Earnings (after deductions like tax)
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Support from parents
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Other income (e.g. grants and bursaries)
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Total income (A)
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Expenditure
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Rental costs
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Deposits for future accommodation
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Council Tax & water charges
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Food/drink
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Day-to-day spending
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Essential travel
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Insurances
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Utilities (e.g. gas and electricity)
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TV/licence
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Digital technology/phone
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Haircuts
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Medical costs/dentist
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Total essential spending (B)
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Clothing
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Holidays/optional travel
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Socialising
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Presents
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Other
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Total other spending (C)

Outturn (= balance for start of next period)

A minus (B+C)

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Words: 0
Interactive feature not available in single page view (see it in standard view).

If you have not already accessed the budgeting app for this course during your time spend on Session 3, why don’t you try it now? It will help you to further develop your budgeting skills and enables you to build a budget that fits your personal circumstances. Follow this link: Managing my budget.

Get registered and then follow the details in the User Guide to get started. The guide can be found by clicking on the ‘Help’ button in the top-right of the screen.

Remember to return to the course after you’ve explored the app. You can do this by following the link at the bottom of each page.

MMMYA_1

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