Managing Your Finances as a Student
What You Need to Know
- Studying at university can be very expensive. With tuition fees costing as much as £9,000 a year, it’s important to keep other costs down and this requires some good money management
- Even if you have a normal bank account, you should still open a specialist student account. Almost all high street banks offer these and setting one up is quick and easy
- Be wary of choosing an account based on the freebies you are offered. These will rarely offer good value. Instead, look out for accounts that offer interest-free overdrafts, as this could end up saving you significant sums of money
- As well as opening a student bank account, it’s imperative you draw up a budget for each term, accurately listing your outgoings like rent with how much you will have to spend overall
- University is the time to learn how to be a savvy spender. Take full advantage of student discounts and avoid splashing out on luxuries. Also beware of spending most of your student loan in the first few days of term
- In most cases, you may not need to get contents insurance for your laptop and other belongings, as these may be covered by your parents’ policy. Be sure to check this, however, and be aware that students aren’t exempt from paying the TV licence fee
- If you do get into difficulties, seek help as soon as possible. Your Student Union will have experts on hand to help you manage your finances, and you may want to consider taking on some part-time work to balance your budget
Managing Your Money as a Student
Starting university can be a stressful time, not least when it comes to money matters. Generally speaking, this will be the first time you have to deal with things such as paying rent, paying your own utilities bills and even buying groceries and other essentials.
While it may be daunting, the good news is that the modern student is able to make use of a wide range of services, all of them designed to make getting on top of your personal finances as stress-free and easy as possible. What’s more, specialist student bank accounts, plus dedicated support from your Student Union mean it’s never been easier to be a financially savvy student.
Here’s what you need to know about managing your finances as a student:
Choosing a Student Bank Account
Arguably the first thing you should do as you start university is to open a student bank account. This is very quick and easy to do. Almost all major high street banks offer special accounts for students, and most will either have a permanent office on your university or college campus or they will at least be represented at your Freshers’ Week.
Even if you already have a bank account you’re happy with, it’s still worth getting a student account. This makes it easy to keep track of how much you are spending during the term, plus you will also be able to take advantage of the offers all banks throw the way of students in the hope of winning customers for life. The only thing you need to worry about is which student bank account is right for you. This will, of course, depend largely on your personal circumstances. Here are some things to bear in mind when shopping around for a student bank account:
- As a rule, you should opt for the bank that offers you the biggest overdraft, ideally interest-free. Even if you think you won’t need it, it’s still very useful to have an overdraft in place, especially since most students underestimate just how much they will end up spending. Do remember, however, that this is not free money. You will have to pay back your overdraft at some point, along with your student loan, so don’t get carried away! Also, bear in mind that you have to start paying interest the day after you graduate, so always check the terms and conditions.
- If you are certain you really won’t need an overdraft, you may still want to open the bank account that offers the most generous overdraft facility. By maxing out an interest-free overdraft and then putting all this into a high interest account for a few years, you can actually end up making a bit of money from your student bank account.
- Beware of the freebies on offer. As a rule, you should always consider the real cash value of any special offer and think hard about whether you will take advantage of it or not. Free mobile phone insurance isn’t a good deal if you are already covered by your parents’ home insurance, but discounted rail travel could be a big bonus if you think you’ll be travelling a lot while at uni.
- Read and then re-read any small print. Look out for any charges, such as fixed fees for going overdrawn without authorisation as these can quickly add up and derail your budgeting plans.
Making a Budget
Once you have your student bank account sorted, it’s time to make a budget for the academic year ahead. Of course, this may well be the very last thing you feel like doing when you just start at university, but a proper budget really is the best way to keep on top of your finances as a student.
The first thing you need to do is work out your likely expenditure. Your university should provide you with a pretty accurate guide to the cost of studying in your chosen city, so take full advantage of this as these. Similarly, the NUS also offers a free and easy guide to the average cost of living for students. This should tell you how much you should expect to pay for your rent, bills, travel expenses and anything you might need for your course. On top of this, you need to set a budget for things like food shopping, socialising and, if applicable, running a car or travelling home by train.
Alongside your expenditure, you will need to work out your income. This will include any savings you may have, in addition to your student loan, any grant and, if applicable, family support. If you have a part-time job, you can add your wages to your expected income, though do take into account whether you get paid weekly or monthly.
Sticking to a budget is never easy, but it’s imperative you do your best. Make notes of what you are spending and, if you find you underestimated your monthly expenditure, go back and start again, looking at where you can maybe balance the books.
Be a Savvy Spender
As a student, there are many ways you can save money. Indeed, most high street stores offer significant discounts for anyone in full-time education, so be sure you are taking full advantage of these. Remember to flash your student card whenever and wherever, and don’t be afraid to ask for a discount.
Do remember, however, that, just because you get student discounts you have a licence to spend money. Always shop smart, ask yourself whether you really need that new item or whether you can genuinely afford it. Plus, don’t make the mistake many students do and blow most of your cash in the first few days of term only to then struggle to get by until the next student loan instalment comes through. Other top tips for keeping your costs down without living like a monk include:
- Only take cash when you go out in the evening. Spending freely on plastic is only too easy once you’ve had a few drinks, and many students end up with a financial hangover after a big night. To avoid any lasting damage, then, only take the amount of cash you think you can really afford to spend on one night and leave the credit or debit cards at home.
- Stay on campus if you can. Sure, the bright lights of the city may be tempting, but university bars, shops and nightclubs tend to be much cheaper, so try and stick with the budget option when you can.
- Avoid expensive gyms. If you want to stay fit, join a university sports club. Not only is it much cheaper, it will also improve your social life, too.
- Try and make saving money a part of your daily schedule. Find out if the trains or buses are cheaper after a certain time, and which nights students get discounts at the cinema or in local restaurants. If you really are strapped for cash, find out when a local supermarket discounts its food and try and do your weekly shop then.
Avoid Unnecessary Costs
Far too many students spend money unnecessarily. If you want to keep on top of your finances, you really need to carry out regular audits of your outgoings and see where you can make savings.
One area where many students pay over the odds is for insurance. In many cases, they pay for contents insurance when their laptop, iPod and other belongings are covered under the “contents away from home” section of their parents’ cover. However, don’t just take this for granted! Do be sure to check and remember that, even if your goods aren’t covered by your parents’ policy, it will almost always be cheaper to get them added on than to get a policy of your own.
But one thing you may need to pay for is a TV licence. Even if you live in halls of residence, if you have your own TV to watch programmes live, you will need to buy a licence. Similarly, if you live in a shared house with other students, you will need a licence for the whole property if you watch TV live. Failure to stick to the rules could see you hit with a big fine, and the authorities are always keen to catch students out, so don’t take the risk.
Consider Increasing Your Income
Keeping your costs to a minimum is just one way of managing your finances as a student. Increasing your income can also be an effective way of keeping on top of your finances, though you always need to make sure any paid work you undertake doesn’t interfere with or even jeopardise your studies. After all, you are at university to learn, not work for minimum wage!
The obvious way of increasing the amount of money you have coming in is to take on a part-time job. Many students manage to combine their studies with paid work, so there’s no reason to worry, so long as you stay sensible. Check out the positions offered through the university job centre, as these will usually be posted by employers who understand what students need, and also consider bar work as this is flexible and can be done at night after you’ve been in the library during the day.
As well as looking for work, you should also check to make sure you have all the financial help you are entitled to. If you are a part-time students, for example, you may be entitled to some benefits, so be sure to speak to a student advisor about this. The NUS also offers up-to-date information on the various sources of funding available to higher education students.
Seek Expert Advice if Necessary
Again, sticking to a budget is almost always very difficult to do, especially if you’re dealing with your personal finances for the first time, and particularly if you’re studying in an expensive city.
Most students will have at least some money worries while at university, so you aren’t alone. In fact, all universities and colleges have expert professionals on hand to help you deal with financial difficulties. Try and seek help as soon as you feel you may be getting into trouble, and don’t be afraid to approach your Student Union or your personal tutor for advice.
The National Association of Student Money Advisors (NASMA) has experts in place in most higher education institutions and they have many years’ experience dealing with a wide range of issues.
- The National Union of Students (NUS) offers a range of support services for students of all ages and backgrounds. They also offer lots of information about financing your studies, so check out their website before you start planning your budget
- The government website DirectGov provides a free student finance calculator to help you estimate your student loans, grants and bursaries for the upcoming academic year