Find out what you MUST and WILL spend money on

The first thing you need to start with is to gain control and an overview. You need to know what it costs to be exactly you with the lifestyle you have. What do you HAVE to spend money on, and what can you CHOOSE to spend money on?

There are always things you have to spend money on, like rent and food. But it's just as important to figure out what you want to prioritize spending money on.

For example, you may be interested in good flavors and want to spend more money on food, or on the contrary, spend as little as possible on food. Do you want to prioritize having money to go to a restaurant or do you have a hobby you want to prioritize?

Think carefully and choose what's right for YOU, without worrying about what your neighbor is doing. Personal finances are always as different as people are different.

🗝 Budget is the key

To figure out what it costs to be you and to plan how you want to spend your money, we use something we call a budget. It's a plan for how to allocate your money and how to get the most out of your money.

Below is a guide on how to go about creating a budget.

1. What is a budget and why create one?

A budget is an overview of income and expenses that you expect to have in the future. In our examples, we use monthly budgets.

We set up a budget to know that the income we have covers all our costs. Income is the money you have to spend, i.e. student loans, salary and if you receive money from someone else in a fixed arrangement (money from parents/grandparents etc.). Expenses are everything you spend money on, such as rent, food, cinema, hairdresser, etc.

2. Get an overview

1. Go into your online bank and print out your bank statement for three months back in time.

2. If December is one of these months, do not use it as December is a month that deviates from normal due to Christmas and the fact that you get half tax on your salary.

3. Once you've printed out your bank statements, use them to find your income and what you spend money on. Get out your marker pens or colors and take one category at a time and mark it. By category here we mean different types of purchases, for example, use pink to mark all food purchases from the grocery store, green for all food purchases from other places such as restaurants, coffee shops, gas stations and so on.

4. This is how you continue with all the different purchases and your income.

3. How to set up a budget

You have now marked your income and the different costs in different colors. Decide on a way that works for you and that you will use when you can start writing down your findings, be it on a sheet of paper, in a book, in an Excel sheet or using an app. The most important thing is that you find the way that is easiest for you.

1. Start by listing your income, student loans, salary and other income under each other and find the total amount.

2. Then write down all the different categories you have marked from your bank statement that are expenses. Add these up under each other.

3. Once you have totaled both income and expenses per month and per category, you have an overview/average of what you usually spend on various purchases per month.

4. You can use this as a starting point when setting up your budget for the coming months.

💰 Income

Your income is your student loan, salary and any other income.

1. As mentioned above, you add these together. The student loan is the same every month except January and August when the major scholarship arrives. We therefore recommend that you enter the monthly amount in your budget.

2. We recommend that you deposit the remaining amount of the grant in a buffer account, which you will find out what a buffer account is in the next part of the course.

3. If you have a job alongside your studies, your salary will be included in the salary category. As a student, you are often paid by the hour and your salary can therefore vary from month to month depending on how much you work. When you set up your budget, you need to look at how much you plan to work and enter what you think you will be paid based on your expected working hours.

4. If, on the other hand, you have a fixed salary alongside your studies, enter the amount in your salary.

5. If you have a summer job but no job for the rest of the academic year, we recommend that you save part of your salary so that you can use the salary from your summer job for all months of the year.

💵 Fixed costs

Fixed costs are costs that you have fixed every month or that come at different intervals throughout the year. For example, rent, insurance and mobile subscriptions.

You must remember to include fixed costs that occur at intervals other than monthly in your fixed costs each month.

If an invoice for insurance of NOK 1,000 arrives every other month, set up insurance as a category of NOK 500 each month in the budget. This way, you set aside the same amount throughout the year, and you won't have any months that are harder or easier than others, as the costs are evenly distributed.

Fixed costs in a separate account

Once you have listed the various fixed costs under each other and added them up, you will find the total amount you spend on fixed costs per month. We recommend that you set these aside in a separate account so that you always know that you have money to pay your fixed costs. It gives you peace of mind to know that you always have money to pay and that you don't have to worry about debt collection costs.

💸 Variable costs

Variable costs are all costs that are not fixed. An example of this is food, streaming services, hair care products, etc. Set up the categories you have marked on the bank statement that are left under each other. Once you have set up the different categories month by month, you can see what you have spent money on. You may be in for a few surprises!

Are you spending money on something you didn't realize, or large amounts on something you're not really interested in?

The great thing about variable costs is that with changes in your buying patterns, you can reduce or change the costs you have. Awareness is key here, now you can make active choices for anything you want to prioritize spending money on.

When you ask yourself these questions, you have to be honest with yourself, what do you want to spend money on, what do you want to prioritize. Can you reduce your food out or takeaway purchases several times a week to once? Only buy chocolate in the kiosk on Fridays and not every day? You don't have to eliminate everything, but with a reduction you reduce the cost.

Great tips for an economical trip to the grocery store:

Take a look at Sparebank1's Waste Calculator to get a quick estimate of how much you can save by "wasting" a little less.

If you go through all your variable costs in this way, you will become aware of your choices and what you want to spend money on. Good luck!!!