Managing your student budget

Managing money as a student is not easy. The student years are often difficult because you have expenses but little or no income. Indeed, when you become a student you start paying for things you didn't pay for before: rent, food, bills (electricity, wifi, water etc.), insurance (health and housing) etc.

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Smarto helps you finance your studies by guaranteeing your student loan. More information on the services offered by Smarto.

The situation in France 🇫🇷

In France, money is often a taboo subject and people do not learn how to manage a budget. 85% of students have never had any financial or budgetary education at school or at home(Banque de France).

Compared to other countries, the French state subsidises tuition fees a lot (universities are almost free). There is a lot of support for students (CROUS, APL, merit-based grants etc.). However, the vast majority of students live below the poverty line and students have an average budget of 590€ / month (taking into account income from student jobs).

With COVID, many have lost their student job. Without it, students have 393€ of resources for 436€ of expenses on average: their budget is not sustainable. This partly explains the current student distress and why 39% of students end the month with a bank overdraft(IPSOS).

The basics of a good budget 🏦

Managing your money can be scary, but we promise that if you follow some basic rules, it's pretty simple.

Your budget = your income - your expenses

Expenditure

There are two types of expenditure:

• fixed costs (rent, insurance, mobile phone charges, etc.). These expenses are recurrent and predictable.
• variable expenses (food, outings, transport etc.). These expenses represent the money you actually have. You can use it as you wish.

In France, the average student expenditure budget is 436€/month. For those who have left the family home it is 637€, of which 288€ is for accommodation and 136€ for food.

Income

A student can get money in different ways: allowances and grants provided by the state, pocket money given to you by your family, your salary from work, your student loan etc.

As with expenses, it is important to differentiate between regular income (e.g. the pocket money your parents give you every month) and one-off income (e.g. the money you get from babysitting once).

For more information on how to finance your studies, we wrote an article here.

There are three important criteria to consider regarding your income and expenses: their total amount, their regularity and their timing.

1. How much money comes in and out of your account each month (total income & total expenditure). For your budget to be balanced, the amount of your income must be at least equal to the sum of your expenses.
2. The regularity of your income and expenditure (if your income varies from month to month and your expenditure is fixed you may end up with a negative balance). If you receive a grant annually, it is important to divide it by the number of months in the year.
3. When this money comes in and goes out during the month. In order not to be overdrawn and have to pay bank charges, your account must be constantly in the black. This means that your income must come in before your expenses.

In practice, how do you make your student budget? 🧑🎓

It is impossible to say exactly how much you should spend or how much you should get because every student's situation is specific. It depends on whether you live with your parents, what city you live in, whether you work, how much free time you have etc. However, there is an exercise worth trying to better understand how you manage your money.

1. Take your last 3 bank statements and highlight your expenses in yellow and your income in green.
   Add them up and see how much you have left at the end of the month. Is your account positive or negative?
2. To better understand your expenses, let's categorise them. Use a colour for each type of expenditure: housing, food, outings, transport, insurance, charges etc.
   Are there any unnecessary expenses? How can you spend less next month? What expense brought you the most joy?
3. As with your expenses, we will categorise your income. Which ones are regular? When do they arrive in the month? Do you have a way to earn more money?
4. Subtract your fixed costs (the regular and necessary expenses) from your income. By doing this, you arrive at what the bank calls your 'leftover': this is the available money you have. It is recommended that you divide this figure by the number of weeks in the month (4.33) to get your weekly budget. You can also divide your available money by the number of days in the month to get your average daily budget.
5. Keep in mind your average weekly budget and ask yourself once a week if you have spent more or less than your budget.

In conclusion, to manage your money well as a student you need to make a budget. The best way to do this is to go through your last 3 bank statements and categorise your expenses and income (using different coloured pens). Once you have categorised them ask yourself how you can increase your income or decrease your expenses. Calculate your average weekly or daily budget and ask yourself from time to time whether you have kept to it.

Our tips for better money management :

• See if the services you use regularly offer student discounts. Spotify offers student discounts, for example.
• Register on student job platforms to make ends meet.
• Buy second-hand products on platforms like Le Bon Coin, Vinted or Facebook Market Place rather than buying new.
• The student years are full of unexpected expenses, so always try to keep €50 in your account in case something happens. A doctor's appointment if you get sick.

If you have any questions about the creation of your budget, you can contact us by email: arthaud@getsmarto.com