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Managing your money

Planning and budgeting

If you are having difficulty managing your finances, preparing a budget can help bring things under control.

A budget is simply an effective way of organising your money so you can see how much money is coming in and how much is going out – and then planning your spending carefully. Many people think preparing a budget is complicated, but it can be very simple – and knowing how to control your finances is an invaluable life skill.

One reason budgets can fail is because people don’t plan for one-off expenses. When working out how much you spend, it is easy to remember recurring expenses such as weekly travel expenses and monthly rent, but it is essential not to forget annual costs such as course fees and car registration and insurance. You also need to allow for unexpected costs such as car maintenance and to regularly put money aside in a fund for emergencies.

Deciding if you need a budget

• Are you constantly borrowing money from friends or relatives?
• Do you usually pay your bills late?
• Are you using more and more of your income to repay debts?
• Does your money run out before you’re due to get paid again?
• Are you paying the minimum amount on your loans or credit cards each month?
• Are you at or over the limit on your credit cards?
• Have you put off visiting the dentist, filling a prescription or purchasing an important book because you can’t afford it?
• Are you unsure how much money you owe?

If you answered ‘yes’ to any of the questions, you need a budget. If you answered ‘yes’ to more than two of the questions, serious money management is essential.

Before you start

Try to keep track of your expenses for several weeks before preparing a budget. If you have a partner or spouse, decide whether you will include costs incurred and income received by both of you.

Write down all your costs, and at the end of the period divide the costs into categories (food, housing, transport etc) and add them up. Don’t forget to allow for expenses such as gym memberships, entertainment and other social and recreational activities.

The results will give you an indication of where your money is going.

Preparing your budget

When you have a clearer idea of your likely costs and income, you can begin filling in the budget table on the following pages.

Think carefully about the amounts you enter into the table – it is better to overestimate your costs slightly and have money left over at the end of the month than to run out unexpectedly.

Hints for completing the budget table

Expenditure

• When estimating your expenses, put down a slightly higher figure to account for price increases.
• Write the amounts in the box for the appropriate period – if you pay board on a weekly basis, for example, write in your board amount in the ‘weekly’ column.
• It may be appropriate to include expenditure amounts in more than one column – for example if you own a car, you might write in registration and insurance costs in the yearly column, average maintenance costs in the monthly column and petrol costs in the weekly column.
• If you have any debts or loans, only include the amount you expect to repay during the year.
• If your utilities (electricity, telephone or gas etc) are billed quarterly or bi-monthly, re-calculate the amount as a monthly cost and write it in the monthly column.
• Add up the costs for each column (total A) and multiply by the appropriate number of weeks, to arrive at a total yearly amount (total B). Then add all the total B boxes to calculate your total expenditure.

Income

• You should estimate your weekly income amounts according to the average amount you have already received during the year or expect to receive over the rest of the year.
• If you are paid fortnightly, divide your average fortnightly income by two to calculate a weekly average income amount.
• Remember to take into account any variations expected in your income over the teaching, examination and vacation periods.

Expenditure table

Cost Types	Weekly	Fortnightly	Monthly	Yearly
Household
Rent or board
Bond
Other establishment costs (including insurance)
Furniture
Household contribution (food etc)
Utilities (electricity, gas, telephone)
Transport
Public transport (fares, concession cards)
Car costs (petrol, maintenance, insurance, registration)
Other living costs
Weekly spending money (eg lunches and entertainment)
Recreation (gym and sporting club memberships)
Medical, dental, optical (including any insurance)
Miscellaneous (eg clothing, haircuts, toiletries, cosmetics, gifts)
Loan or debt repayments due this year
Study costs
Course-related books and equipment (including prac/fieldwork costs)
Computer/internet
Course fees (if applicable)
HECS or CSP fees (if making up-front payments)
	=	=	=	=
Total A	$	$	$	$
Multiply by number of weeks	x52	x26	x12	x1
Total B	$	$	$	$
Add together all the amounts in total B boxes	Total annual expenditure			$

Income tables

Weekly amounts	$ average per week	Number weeks worked	Totals for period
Employment income - A
January and February (vacation or summer semester)		x	=$
March to May (semester one)		x	=$
June and July (semster break)		x	=$
August to October (semester two)		x	=$
November and December (vacation or summer semester)		x	=$
Total employment income - A			$
Other weekly income (where applicable) - B
Centrelink benefits
Scholarship
Partner's income
Parental allowance
Government parenting allowance
Any other type of 'pension' or allowance/supplement
Miscellaneous income
Total other income - B		x52	=$

 

Yearly amounts		$ per year
Lump sums - C
Savings at start of year
Parental allowance
Bank interest etc
Taxation refund
Total lump sum income - C		=$
Total of A, B and C above	=Total annual income	$
Transfer total expenditure from previous table	Minus total annual expenditure	$
Totoal income less total expenditure	= Surplus or deficit	$

If your budget doesn’t balance

If you see you have a shortfall in funds, you will need to revise your budget either by decreasing your expenditure or increasing your income with additional work or loans etc. You will need to review your progress continually until you’re happy with your financial situation.

Tips for reducing your spending

• Establish ‘low-spending periods’ when you limit your travel (walk where possible), borrow videos from one of the campus libraries, find out how cheaply you can make a good meal at home, and find entertainment such as free galleries and concerts.
• Make your lunch instead of buying it.
• Cook meals at home and, when making dinner, make enough so there are leftovers for your lunch the next day.
• Think of your costs in terms of ‘wants’ and ‘needs’. If you are short of cash, cut back on some of those that can be classified as a want (luxury).
• Think about carpooling to ease petrol and parking costs.
• Get involved with clubs and societies – it’s a great way to enjoy inexpensive activities.
• Shop for clothes and other items at markets, factory outlets and opportunity shops.
• Shop for groceries at markets, wholesalers and discount supermarkets.
• If you need furniture, check out opportunity shops, garage sales, the Trading Post (published each Thursday, and online at www.tradingpost.com.au), on-campus notice boards or the online Monash Marketplace (via your my.monash portal), where students often advertise household and other items.

Saving

You need to aim to spend less than you earn each week, which can be hard to do unless you set your mind to it. Saving a small (or hopefully large) amount each week allows you to put money aside for unexpected costs that could otherwise blow your budget.

If you can save at least 10 per cent of what you earn, you will soon have a large savings account. For example, if you earn $400 a week and save $40 each week, you will have $2,000 by the end of the year – enough for a holiday.

You can also make your money work for you. Look around for special offers from financial organisations and banks that do not charge fees to students.

Other banks offer incentives for keeping your money with them, but make sure you look for hidden costs, or you may end up having to pay the bank more than your money earns. Some savings accounts reward you for not taking out money, which helps you save. If you find it difficult to save, open an extra account where you cannot draw money for a fixed period. Talk to a Student Financial Aid adviser about what is best for you.

Concessions and discounts

Health Care Card

Refer to ‘Health’ in the Living expenses section of this guide.

Student card

Your student card entitles you to many discounts or benefits such as reduced entry to movies, museums and art galleries. Keep your card handy and always ask if there are discounts available for students when shopping for goods and services – you may be well rewarded.

Taxation

Don’t forget to keep an eye on your taxation responsibilities – it is easy to forget about tax if you’re not careful. If you need to lodge a tax return, it must be done by 31 October, but it can be done as soon as you receive your payment summary from your employer.

You will need to lodge a tax return if:

• your income has exceeded $6,000 (the current tax-free threshold) in the last financial year
• your taxable income was less than $6,000 but you paid tax (you will obtain a refund)
• your taxable income was less than $6,000 and you are a non-resident of Australia.

Students who are both working and receiving government assistance may be required to pay extra tax at the end of the financial year unless they inform either their employer or Centrelink, one of which will make provision to have the appropriate amount of tax deducted. Contact a Student Financial Aid adviser for assistance or visit www.ato.gov.au.

International students

Any non-resident of Australia who earns $1 or more in the financial year must lodge a tax return. Non-residents are not eligible for the tax-free threshold. However, if you are studying a course in Australia of greater duration than six months, you are treated as a resident for taxation purposes. You will need a tax file number in order to lodge a tax return. You can apply for a tax file number via the web at www.ato.gov.au.

Avoiding debt

Credit cards

Credit cards, if used carefully, can be a useful part of managing your finances. However, if credit card debt is allowed to accumulate, it can rapidly get out of control due to the high interest rates charged. Look for cards that don’t charge annual fees.

Mobile phones

While there are many benefits to owning a mobile phone, it is important to remember how expensive the bills can be.

Keep your phone usage as low as possible, and check with your provider that you have the plan that best suits your circumstances. If you find your monthly bill too expensive, consider switching plans or using a pre-paid phone or SIM card, which allows you to keep a closer track of your costs.

Avoiding scams and traps

When you are involved in your studies and don’t have enough time to work much, opportunities that seem to allow you to make money easily will be tempting. Remember that if something seems too good to be true, it probably is.

‘Stuff’ magazine, which can be downloaded from the Consumer Affairs Victoria website at www.consumer.vic.gov.au, provides advice on avoiding scams, internet security and general consumer rights.

You can also visit Consumer Affairs Victoria for advice and information on a range of consumer issues, such as buying a car, mobile phones, renting and shopping rights.

Money Matters home: Introduction: Costs of studying: Living expenses: Establishing an income: Managing your money: Getting financial help: Contact details