The Struggling Student Rants—How to Manage a Household on a Budget

The Struggling Student Rants—How to Manage a Household on a Budget

Remember your very first paycheque?  The one from that paper route you had in minus-thirty-degree weather?  Or from the babysitting gig for the neighbour’s little angels who turned into Damien when their parents walked out the door?  Did that paycheque come with “how-to” instructions?  Unlikely.  I know I blew my first paycheque getting pink fuzzy dice for a used 1983 Volkswagen Polo I was also suckered into buying.  Lord, how I wish I had “how-to” instructions at 18, or someone to just slap me upside the head, or even just give me the Terry Crews look of disappointment.  How-to instructions and caution signs seem to be included with everything these days, even coffee from McDonald’s.  Yet, with something as important as our salaries, we’re left to our own devices.  We figure things out on our own, or we don’t.

No one is born financially savvy.  Yet, when we venture off into the world, we’re expected to be able to manage our money effectively.  But, like any skill, like learning another language, the skill of money management must be developed through practice and time.  The end result—people who manage their finances in a responsible manner have peace of mind.  They know how to pay their living expenses, keep their debts to a minimum, save for things that make life worth living, and avoid constant anxiety.

So how do we develop our money management skills?  First, you need to ask yourself some questions­­–and be honest with yourself:

  1. How much effort do you put into managing your own money? An hour a week?  Half an hour a month?  15 minutes a year?
  2. Do you manually track of what you spend each day or each week?
  3. How often do you regret spending money on something you get no real benefit out of? Or looked at your bank statement and asked “What did we buy at Walmart last month for $100?” and then not remember?  This can become a problem when the paycheque is gone and you still have unopened bills.

You might think these questions are silly.  The truth is, you need to get a good understanding of what happens to your income.  Your salary is important too, but it’s your net pay that matters most­–what you bring to the table at the end of the day.  Your take-home pay, and what you do with it, is the most relevant factor in determining your financial savviness and success because it’s what supplies the cash for the items you need in your household.  It’s what pays your bills and expenses.

Once you’re honest with yourself, you might realize you may need to put in a bit more effort into tracking where your take-home pay goes.  This is where you start creating your household budget­ or revamping your existing one.  You might be thinking “Oh, I got this!  I don’t need to write down my budget to keep track of my money.  I know how much I bring home each month and what I do with it.”  Do you?  I challenge each and every one of you to try it for one full month.  Track each and every cent that goes in or out.  It will be tedious.  And it will be eye-opening.

But a budget is not a one-hour project and does not come with “how-to” instructions either.  It is a living document that is perfected through trial and error.  It is adjusted to each household and each month’s expenses–expected or surprise expenses.  It takes a while to master, but, once you do, surprise expenses won’t catch you off-guard so often.  There is also a large misconception that a household budget is restricting–people feel confined or boxed in.  The truth is, a budget can give you more freedom than you currently have.  Knowing exactly where your money is spent and how much of it you have on an ongoing basis is a liberating feeling.  You don’t need to feel confined or restricted; you can include things like entertainment, clothing, and the occasional eating out.  And the unexpected bonus comes when you realize that you can spend money on entertainment guilt-free because you planned for it.

Emergency Fund

If you’re in deep financial trouble and trying to put out fires, you would be inclined to think that an emergency fund is the least of your concerns.  You’re wrong.  The first priority household budget item is a floating emergency fund.  An emergency fund is what will save your butt in the event of a catastrophic occurrence – you lose your job, become injured, or something happens that renders you powerless to take care of yourself and your family.  It doesn’t have to be a huge amount to get you started.  Start stashing $50 or $100 away per paycheque and don’t look at it or touch it.  It will grow into a huge comfort cushion in no time.


Keeping a roof over your head is an essential household budget item.  This category doesn’t just cover how much you pay in rent or for your mortgage.  The Housing category should include household maintenance and repairs, as well as insurance and property taxes.  For current or prospective homeowners, this can be eye-opening about the true costs of home ownership.  You can estimate how much “home” you can afford, without relying on just the mortgage broker’s advice, who is prone to the commission bias.  According to financial experts, your housing costs should not exceed 35 percent of your net income.  It is obvious that none of these experts live in Vancouver or the Greater Toronto Area.


“Pay yourself first” is a common phrase in the financial world – this doesn’t mean “Treat yo’self,” contrary to popular belief.  It means you should allocate a specified amount towards your own savings and investment accounts first and foremost.  And then deal with the bills.  I used to think this was a dumb concept for real-world problems and that it only applies to the lucky few who aren’t struggling to make ends meet.  But, once I read enough about it, it made more sense to me.  Most experts maintain that once people make the commitment of paying themselves first, they’ll be forced to find a way to pay their bills.  It might require taking on another part-time job or force you to cut some expenses, like Netflix.  In all practicality, it will be a combination of increasing income and spending less at the same time.  But here’s the irony—most people won’t be determined enough to take a second job, wear second-hand clothes, and cut their Netflix or Amazon Prime, all just for the sake of putting an extra $50 into their savings account each month.  But they will be motivated to do all that, if they risk defaulting on their bills or having their heat turned off.


Having water, electricity, and heating is necessary for any household, so paying these expenses should be a top priority.  This household budget category should include gas, electricity, water & sewage, cell phone bill, and Internet access (how else are you going to read The Voice Magazine every month?).

Health Care

Staying healthy is crucial.  Depending on your needs, you may need to spend more or less than others, but it’s important to allocate money for these expenses.  This category should include items such as health insurance premiums and prescription medications.  Eyeglasses, contacts, and other health aids are in this category, too.  AUSU has a great agreement in place with FYI Doctors for lower costs on eyeglasses and contacts, so don’t forget to check that out if you’re in the market for new glasses!  I was very disappointed when the survey results came out a couple weeks ago.  Unfortunately, only 27 (or 2.3%) of the 1,183 AUSU members that filled out the survey had used this promotion.

Consumer Debt

Consumer debt is a category that deserves a dedicated column of its own, but in a nutshell, it consists of credit card bills, student loans, and car payments.  If possible, your total consumer debt should be very low (30 percent or less of your net income) or nonexistent.  Sadly, Canada’s consumer debt to income ratio has been rising every year to astronomical levels.  This has been happening every year, for the past 30 years, according to Stephen S. Poloz, Governor of the Bank of Canada, and one-third of this consumer debt is comprised of mortgage loans (Poloz, 2018).  For many families, a certain amount of consumer debt is a reality.  But by sticking to a realistic household budget and making the necessary sacrifices this can be tackled and the beast can be defeated.

Food and Groceries

Everybody eats, that’s an unquestionable fact.  But what you eat and how you spend your money on eating make all the difference.  Do you have dinner out every week?  Do you stock up on groceries after a long day at work, and then pick up a pizza on the way home?  Or do you pick up a latte on the way to work every morning?  How much to allocate to this budget category will depend on family size, eating habits and your knack of making wise choices.  But this is also a category where the wiser the choices you make, the bigger impact you will see on the above categories.  Try setting a realistic budget, on the overestimating side.  If at the end of the month, there is money left over, you can roll it into next month’s grocery budget; or, even better, put it towards your savings accounts or consumer debt.

Personal Care

If you have a family to support, these costs in North America are quite expensive.  Hair care, personal hygiene products, laundry supplies, and clothing are some of the hundreds of items that fit into this budget category.  Some might choose to just lump-sum this budget category into their grocery budget.  For others, sub-categories might work better.  In our household, we lump all these categories into one single grocery budget–except for toiletries and clothing.  Of course, we don’t buy clothes every month–that would be against our #debtfreedom goals.  But, we do set aside a small amount each month (e.g., $20-$40 per person) and let it accumulate.  That way, when Black Friday rolls around next year, I can spend my saved amount guilt-free and in cash!


After you’ve met all your household responsibilities, and dissected your personal finances and spending, you probably want to have some fun!  There’s absolutely nothing wrong with that.  The amount will depend on what’s left over and what your priorities are–tackling debt, saving for an emergency fund or AU tuition, or even saving for retirement.  Your entertainment budget can also be broken down into sub-categories.  It could include spending a couple dollars for a museum visit or a day at the local park and putting aside some money for that dream vacation you’ve had in the back of your mind.  All you need is imagination!

Poloz, S.  S.  (2018, May 03).  Stephen S Poloz: “Canada’s economy and household debt – how big is the problem?”. Retrieved March 06, 2019, from