While the cost of tuition for tertiary level education is subsided in Trinidad, there are still other costs that students incur such as transportation, room and board and purchasing the relevant texts for the various courses. A lot of us may not have the money to meet such costs and may source a student loan from a financial institution. If you have the opportunity to attend university overseas, your student debt will be significantly higher.
Whether you choose to attend university at home or abroad, for most of us, after three (3) or four (4) years, we leave the educational facility with not only a certificate or degree, but with a debt burden. It is highly recommended that you try and pay off your student loan as quickly as possible and as such, once you are successful at securing your first job, you should immediately create a budget.
Creating a budget is simple :
- Record your income – your job letter will include this information. Please remember to minus 25% from your income to accommodate taxes.
- Record your expenses – list all your monthly expenses including groceries, utilities and rent. Include in this list savings for each month and your monthly repayment for your student loan. It is highly recommended that you break down your expenses into Fixed and Variable expenses. Fixed expenses cannot be altered as you do not have control over the payment such as rent and loans, however, variable expenses can be reduced as you can cut back on the amount of money you spend. Variable expenses includes your grocery bill, cell phone charges, gas for your car and entertainment expenses.
- Compare your Income with your Expenses – if your income exceeds your expenses, then you are at a good place to start. This excess income can be channeled into additional savings such as retirement or be used to pay more on our student loan in order to eliminate the debt faster. If on the other hand, your expenses are higher than your income, you need to make some changes. It is easier to reduce your variable expenses by cutting back in those categories and it should help to bring your closer to your income. If reducing your variable expenses is still not allowing your income to at least meet your expenses, you may need to examine your fixed expenses and make some tough decisions.
- Once you have created a budget, it is highly recommended that you track your expenses to ensure that you do not overspend. Life is full of surprises hence some months you may encounter an unexpected cost – such as car repairs or you may fall ill and need to go to the doctor. To cover this cost you can shift around money from your variable expenses.
- A budget is not static – you must evaluate it periodically. A great tip is to save your receipts over a couple months – this will give you a realistic view on the amount of money you actually spend on average. As your life changes, so is the need to change your budget, hence you should tweak it until it works for you.
You can use our Monthly Budget Planner to assist you in creating and maintaining your budget.