Written by Muhammad Twaha Ibrahim
One of the most important things to learn in life is managing a budget. It is almost like a rite of passage into adulthood. And if you’re like me five years ago, moving to a new country, living on your own for the first time with little to no clue on how to spend sensibly, managing a budget can sound pretty daunting. But, as I learnt over the years, it’s not that hard at all.
The underlying principle of managing a budget is “live within your means”. So, if you earn $2,500 a month, change your lifestyle so that your expenses stay under $2,500 (ideally well below $2,500). Expenses include rent, food, utilities, transport and other random things. Keep in mind that each month, your biggest expense will most likely be rent, followed by food. While monthly rent (and utilities) is a fixed amount that you know will go out, food expenses are something that can vary, and if you don’t keep an eye out on how much you’re spending, you’ll quickly go over budget.
So, the first and most important thing you can do to manage a budget is to keep track of all your expenses. Yes, all of them, including that coffee you bought from Starbucks last week after class. Why is it so important to keep track of expenses? Because, as I learnt the hard way, if you’ve been spending way too much on Boba milk tea, you’ll run out of money to spend by the middle of the month. Keeping track of your expenses can remind you how much money you have left for the month and how you need to pace your expenses.
The need to keep track of my expenses led me to a really useful app, “MoneyLover”. Although the name sounds very greedy, it is a great app that lets you log your expenses by category (e.g. rent, utilities, groceries etc), set a budget and view your monthly expenditures. After I started using it, I began realizing where I was spending more money (e.g. coffee) than I should be. I could also plan ahead and account for future expenses, like auto insurance or visa-related fees.
Looking at my spending habits over the course of a few months, I set a maximum amount for myself that I was allowed to spend each month. I would recommend setting this limit as soon as you arrive. Over the next few months, as you adjust to life at UCI and figure things out, this amount will also change before you have a good idea of your budget.
I mentioned earlier that food will be a major chunk of your expenses. This is especially true if you eat out frequently. The best way to save on food related expenses is to cook your own. I like to get a week’s worth of groceries, cook the whole week’s food over the weekend and have it throughout the week. If you love drinking coffee, consider getting a French press and brewing your own at home rather than paying a visit to the café every morning. A single coffee may appear not to cost that much on its own but getting one every single day quickly becomes a big expense. That’s where logging your expenses will be extremely useful.
Another important way of staying within budget is to make sure you don’t buy things that will have a high running cost. For example, avoid buying a car that has high maintenance costs. They will unnecessarily burden you. If you’re thinking of buying a bicycle, get a cheaper one that is easy to maintain and won’t grieve you too much if it gets stolen on campus.
Remember, “live within your means”. Don’t spend more than what you’re earning, otherwise you will run out of money. Keep track of all your expenses. It isn’t that difficult and it will help you plan things in the future.
Graduate school is challenging. Graduate school in another country is hard. You don’t want your depleting bank balance distract you from your studies. Learning to manage your budget isn’t as hard as they say. All you need to do is keep track of your expenses, set an upper limit and make sure you don’t go beyond it.