Budgeting Basics for a year at Newcastle University Business School

Written by Raul Encalada Verastegui

Budgeting every month can be very useful, and it is effortless. Just get the basic numbers, and you are nearly there. Here is my step-by-step guide. 

Step 1. Classify your numbers 

You must be aware of two types of numbers: revenues and expenses.  

When listing your revenues, think about the money you have right now and the money you might receive in the year. For example, I listed my savings, cash, and credit card limit as money I can use now. I then think about any additional funds that I might receive during the year, such as money for my birthday, Christmas, and work hours.   

Afterwards, I write down all my expenses segmenting them into three areas: essential, non-essential and one-off payments.  

Essential expenses are the ones I cannot live without. This includes rent, mobile plan, transport and groceries. Non-essential expenses, such as streaming subscriptions, gym, haircuts are important but disposable. Finally, the one-time payments are purchases I will need to make for the year, for example, a pan, an iron or a pair of snow boots.  

Step 2. Get the data 

An £8,500 budget for a year would be enough to live independently. It might be a large sum to have from the beginning, but you could save for part of it and expect to obtain the difference later in the year. For example, I arrived in the UK with £6,900 but expected some aid from my family at Christmas. I also planned a job to increase my funds.  

Regarding the yearly expenses, I listed those above: 

• Essential expenses 

• Rent: £5,200 - £5,500 (depending on accommodation) 

• Mobile plan (20 GB a month): £120 or £10 a month 

• Transport: £360 for a yearly pass 

• Groceries: £840 or £70 a month (food and hygiene) 

• Non-essential expenses 

• Gym: £160 for a yearly subscription at Newcastle University 

• Haircut: £180 

• Spotify: £132 

• Netflix: £84 

• Fun money: £1,200 or £100 a month 

• One-off payment expenses 

• Iron: £10 

• Pan: £10 
• Snow boots: £30 

It is important to mention that the costs are suggested and likely to change, but as you can see below, £8,900 covers the yearly expenses previously mentioned. Please note these are my expenses and may be different to other students. 

Step 3. Keep a record of the data 

Now that you know incoming and outgoings, let’s distribute it over 12 months. There are costs that I recommend paying in advance for the whole year as they are much cheaper, like the gym and the transport. A £360 card allows you to use the train as much as you need, saving you money.  

Usually, the first month is particularly costly because you get to know the city, discovering where to eat and buy groceries, and you can also choose to pay for the yearly subscriptions. You might expect to spend between £1,000 and £1,400 the first month, but the expenses could get down to £600 for the rest of the year. 

Top tip: A tool to make budget easier 

Once you settle all your expenses and how they will be distributed over the year, it is key to use the budget. It is an excellent decision to reduce uncertainty on how our daily expenses might impact our fund availability in the future. I use an Excel sheet where I put all my numbers and forecast for the month. I adjust it according to what I spend. As I have also mentioned, costs might change but try not to deviate too much from what was budgeted.  

For example, I use my banking app to track my grocery expenses as my purchases are recorded there. I know how much I spend every week and can calculate the monthly expenses. I then put the amount in my Excel sheet with a red colour so it is distinguishable from budgeted numbers. In September, I did not know which supermarket offered the best prices, so I spent a little bit more, but as you can see, I tried to keep it controlled.   

Basic Excel formulas update the remaining for the month and the rest of the year. Finally, you can take a look at my budgeting document here and always try to find other budgeting tools that might be easier for you. In the end, the importance of a budget depends on how often you keep it updated.