How to budget effectively while studying abroad in Canada
What’s the best way to budget? It’s an age-old question, and the truth is there’s not necessarily one right answer. While approaches to budgeting vary from person to person, no one can argue about its necessity – especially for international students.
We collected our best budgeting recommendations for students in Canada, so you can make the most of your time abroad and maybe even start saving for future goals along the way!
Understand income and expenses
The first step in creating a budget is knowing how much money you’re making. As an international student, your primary income is probably coming from a combination of family support, personal funds, student loans, scholarships and/or part-time jobs. List them all out! Next, list all of your fixed and variable expenses. A fixed expense stays the same and is paid on a regular basis, something like rent or your internet service payment. A variable expense might also be recurring, but the amount could vary. Think things like transportation, groceries, etc.
Once you understand how much money is coming in versus how much is going out, your budget will start to take shape.
Set financial goals
Next, you’ll want to identify any financial goals you have. Goals can help you stay motivated during the day-to-day reality of following a budget. Some ideas might be saving up for a new computer, saving to pay off your student loans after graduation, or creating an emergency fund.
As an international student, it’s easy to feel like you don’t make enough money to set goals – but that’s not true! Contributing as little as CA$10 a month toward a goal can add up in big ways over the long term.
Pick a budgeting strategy
As you’ll likely find out, it’s easy to have a budget written down on paper, but things are trickier in real life. Being abroad – in a beautiful place like Canada, no less! – is a once-in-a-lifetime experience you don’t want to miss out on. It might feel like a budget is holding you back, but the reality is your budget can give you more freedom to relax and enjoy your surroundings with the knowledge you’re still financially on track.
So, let’s review some of the popular budgeting options that can help you stay on track:
- 50/30/20 rule: Allocate 50% of your income to needs (rent, groceries), 30% to wants (entertainment, dining out) and 20% to savings, goals or debt repayment.
- Zero-based budgeting: Every dollar you earn is assigned a job. It doesn’t mean you have to spend all the money you earn. Instead, you have to allocate every penny of your paycheck to a specific bucket, whether it’s paying bills, saving or spending on entertainment.
- International students in Canada can file a Canadian income tax return. Most foreign students are eligible for benefits and tax credits.
Once you know what strategy fits your lifestyle best, stick with it and track your progress.
Manage your money
Once you know your income, expenses, goals and budgeting strategy, it’s time to make use of the many resources available to international students in Canada to help manage your money. First things first, getting a Canadian bank account is an essential way to track your spending and manage your money while you’re abroad. It can also help you save money by minimizing foreign transaction fees from your home country bank. We recommend checking out TD Bank Canada’s* International Student Package if you need help finding a trusted bank that caters to the needs of international students.
Next, take advantage of financial resources available to you from your school. Many schools in Canada offer financial workshops to help students manage their money better – plus, these events can be a great way to meet like-minded friends committed to being smart with their money.
Finally, make use of technology! Whether it’s a simple budget tracker spreadsheet or a more comprehensive budgeting app, there are plenty of money management apps available on your computer or smartphone.
You’re on your way to becoming a budgeting pro!
Budgeting isn’t rocket science if you take the time to understand your income, set goals and use available resources to help. Remember, your budget is never going to be perfect. Things will vary from month to month, and that’s okay. The important thing is that you try your best to stick to your plan, even a little effort goes a long way when it comes to budgeting!
*MPOWER has referral agreements with TD Bank and may earn referral fees from this relationship.
