CREDIT: MELISSA NOVACASKA
Whether or not you've received Ontario Student Assistant Program (OSAP) funding, budgeting is a key source to making sure you're financially set for the upcoming school year.

Congratulations, you have just received your Ontario Student Assistance Program (OSAP) funding for the semester. This may also be the first time you've had so much money just sitting in your bank account waiting to be spent. I urge you to resist the temptation to go out and spend your OSAP frivolously.

First, your OSAP funding is a mix of grants and loans meaning grants don't have to be paid back unless you don't complete your studies and loans have to be repaid upon graduation with interest.

Fun fact:

Your OSAP loans are made up of a provincial portion and a federal portion. The provincial portion will be repaid at the prime rate of interest plus one per cent and the federal portion will be repaid at the prime rate of interest, which is currently 2.95 per cent, plus another 2.5 per cent.

Another fun fact:

OSAP funding is typically handed out twice per academic year with 60 per cent at the beginning of your first semester and 40 per cent halfway through your studies, or at the beginning of your second semester.

The best way to deal with all those grants and loans sitting in your bank account is to build a budget. I know, groan, but hear me out.

A budget will do three things for you: it will help you manage your money so you can pay your bills on time and in full, it will reveal your spending habits and it will allow you to set spending and saving goals.

How to build a budget:

First, create a worksheet with the following headings such as Income, Fixed Expenses, Variable Expenses and Discretionary Income. Fixed expenses are expenses that remain stable over time, such as rent and variable expenses are expenses that fluctuate each month, such as entertainment, groceries and even your cell phone bill. Under income, input what you've received from OSAP and divide this figure by four, this is your monthly income for OSAP for your first semester. At this point, I usually pay up to four or five months of rent, purchase my textbooks and save some extra money for bills that I know I'll have to pay.

Next, sign up for a service, such as Mint (mint.intuit.com) and register your accounts (chequing, savings, credit cards, etc.). If you're uncomfortable signing up for a service, keep every receipt you spend and every paystub you earn for a month.

Using the budget worksheet you created, fill in your expenses for what you've spent after one month and make sure to also include your income and any additional financial aid you may have received, such as awards or bursaries.

Now that you have the numbers for each category on your budget worksheet, you'll want to calculate your disposable income.

To do this, subtract your total monthly income from your total monthly expenses. Your disposable income will tell you how well you've handled your money this month. If it's a positive number, you will have money left over, which I recommend locking away in a savings account and if it's a negative number, then you've spent more than you've earned and you'll need to adjust your spending accordingly.

A few tips to make budgeting a little easier:

• Be honest with your budget because only you get to see and work with it.

• Always pay your fixed expenses such as rent and tuition, first.

• Plan for your expenses. You know you have a credit card or phone bill due in the next month, set aside some money to pay your bills on time, or even ahead of time.

• After a month, reduce, increase, or eliminate areas of your variable expense spending. Many students don't realize how much things really cost, so they tend to overspend in areas that are not necessary, such as entertainment and shopping and starve themselves in areas that are essential, such as groceries.

• Pay yourself first. Always set aside a percentage of your earnings into a savings account, you'll thank me later.

I'll admit, most budgets don't always work immediately as they take time to work properly. Budgets also need to be treated as a “live” document and will need to be tweaked and fine-tuned continually in order to see results. Another common reason why a lot of budgets don't always work for students is because they don't adapt their budget to meet their income. Students may have to accept that they're probably not making much in the way of income. I'm sure you've heard the phrase “live within your means”, but what does it really mean? It means that throughout the budgeting process, you'll have to realize the actual costs of living and decide how to walk that fine line of making and spending money and developing some savings for the future. Doing all these steps will ensure that you develop lifelong money management skills early on that will benefit you for the rest of your life.