Canadian Student Tax 101: Budgeting

Benefits of Budgeting

Budgeting helps you have more money. Your tax and financial situation will affect your quality of life throughout your post-secondary education and professional career. It’s an excellent practice to start as soon as possible because budgeting and following a budget can be difficult to master–and to do consistently. The best way to watch and manage your money is by budgeting. It’s not something most people love, but it’s the best way to ensure you don’t end up in financial trouble now or in the future. Planning isn’t fun, but lots of fun can come from having more money when needed.

Budgeting Can be Simple & Fast

It’s stunning how much time people can spend playing video games or streaming movies compared to creating and monitoring a personal budget. It doesn’t take much to develop and monitor your budget. It just may not be what you and your friends want to do, which speaks to priorities and peer pressure. Creating a simple budget can take less than 90 minutes and some paper (though we recommend a spreadsheet) and can probably be done in as little as 30 minutes per month.

Over time, this exercise becomes more manageable; you even learn to enjoy tracking your money and making wise decisions around earning, spending and investing what you can. It’s like going into class for the first day or semester – the work, people and surroundings may feel overwhelming but become familiar and even fun over time. 

Tech Tip

If you use a digital spreadsheet instead of paper, you can make templates and formulas that save you time and increase your accuracy, leaving time for more important things.

The Budgeting Process

List Your Income & Expenses

Start with a list of incomes and expenses. And then subtract the expenses from the income. That’s your profit or loss. It’s best to look at it monthly. You may need to reduce your expenses or increase your income if you have a loss. But when you’re a student, increasing income means taking more time away from studying, so best to look to cut expenses if you’re losing money as a student.

Start with Necessities

When you build your budget, start with the big rocks – those items necessary for your academic success and life.

Be realistic about your costs. You don’t want the added stress of being late on rent during exams. So look into ways to help you manage your money. For example, buying used textbooks, buying clothes at thrift stores and carrying a reusable mug can save you a lot. Tech can save you money, but you have to be very wise. For example, buying a second laptop for streaming when you need to study is a waste, whereas a digital textbook subscription is often cheaper than a paper textbook. Similarly, for technology, you need to consider what you need versus what you want.

Tech Tip

If you are self-disciplined and like to work at your own pace, taking an online class instead of an in-classroom can save you money on transportation costs. Not everyone learns well this way, but save on travel if it works for you.

Budgeting Fun

Students need to have fun and blow off steam–it’s a big part of the post-secondary experience. Make sure you build a bit of fun into your budget. Some things may be available at little to no cost. For example, do you need a gym membership? Or does your school have a gym free for student use? Are there free events and activities offered by your school? Most unis have pub nights in Canada (drink responsibly if you’re old enough, please) with cheap food and drink. If you go to that fancy club, you could spend all your money within five minutes of entering.

Use the school’s resources to potentially save money and get more involved in the community in these key spending areas:

  • Eating and drinking at restaurants, clubs and bars
  • Spring break events and trips
  • Entertainment (movies, concerts, sports, etc.)
  • Gaming and streaming services
  • Extracurricular activities

One of your best friends may be your school library. Nowadays, your library pass often includes streaming sites that you would normally have to pay for. It’s not always the case, but check their website to see what they offer. You may be able to save some money.

It’s easy to save money by bringing your lunch with you, but it isn’t always realistic. Think about your life and time, and plan when you can pack your lunch and when you’ll need to buy lunch. Now is the time to decide what to do and, more importantly, what not to do. If you save money on everyday experiences, like packing your lunch for school and carrying your reusable bottle, it frees up cash to spend on fun things. 

The Trap: Indulging Because Everyone Is

You’ll want to do everything as a student – but you can’t. Time and money will be the critical limiting factors of what you can and can’t do. Beware of falling into small traps that have significant impacts on your finances. That designer specialty coffee every morning or imported beer with your nachos can add up over the year. Knowing what you can afford and what matters to you is essential. It will help you say yes to the right things and no to the wrong. Surrounding yourself with people who think like you will help you stay on track and still find ways of partaking in fun.

Monitor, Rinse & Repeat

Every month, look back and see how things went. You’ll get used to the seasonality behind things. For example, some months you’ll spend less and other times more. Learning about your seasons and understanding your behaviour during these times will help you plan your results.

Why Budgeting

You’ll discover small ways you may be wasting money or inadvertently spending more than you should. Finding these small leaks and understanding your habits can help you adjust your spending behaviour and keep you on track.

Monitoring your spending can be done in as little as 30 minutes per month. If you want to get more precise and more detailed, go for it – there are entire careers in budgeting!

One thing to know is this: budgeting isn’t a way to restrict you or keep you from enjoying your student life experience. It’s a way to ensure you enjoy a responsible lifestyle that doesn’t leave you in trouble long after you graduate.

Have you signed up to receive our monthly newsletter with blog posts, inside news and more? It’s easy to join!

* indicates required