As the academic year starts again, thousands of Britons are heading off to university for the first time. For many students it’s going to be a shock. Even the best organised will end up in debt at the end of their studies, but most of us aren’t very well organised at 18 … especially as it’s the first time we’ve been responsible for our own finances. Rent, grocery shopping and bills - all unknown territory for most teens. So what do you do to stop yourself getting into trouble and keep yourself at least close to the black.
Of course, NOBODY should get to 18 not understanding money and how it works. It’s ridiculous that personal finance isn’t taught as a core part of the National Curriculum. A student can leave school with a ‘A’ level in economics, understanding supply and demand, GNP and money supply, yet not understand the fundamentals of money management.
The other problem is that parents of students don’t really understand the way it works these days. Thirty years ago, when I was a student, we had to struggle on a pretty miserly grant, but there was limited opportunity for getting in debt … banks just wouldn’t give you much of an overdraft. We could also sign on for dole money during the holidays.
Today, students have a raft of grants and loans available. Accommodation standards are a lot better too, and so students can live in a great deal more comfort than their parents did. That’s great … but of course it all has to be repaid at some point. As you could, conceivably, leave university £20,000 in debt, it’s important you take control of your finances from the start.
The crucial thing, and this goes for any of us trying to live within our means, is to draw up a budget, giving yourself a set amount of money to live on for each week. Otherwise, those on limited grants can simply run out of cash before they run out of weeks in the term. While those who do have access to more funds will simply see overdrafts spiralling out of control.
You need to have all your income on one side of the balance sheet, all your expenses on the other. The very act of making a budget tends to focus the mind and rein in excess spending, so make sure you’re fastidious about this. You don’t need to log every Mars Bar you buy … no one should want to develop an unhealthy obsession with money, and there’s really no need. You SHOULD allocate a set weekly amount for spending on comforts and luxuries - getting a fixed sum of cash out of the ATM on Monday morning and disciplining yourself to live within it is a good plan … what you spend it on is up to you.
But you DO need to anticipate EVERYTHING. People proudly show me budgets that have mysteriously missed their mobile phone bills, quarterly electricity bills, any contingency for travel, and so on. If in doubt, overestimate … better to have a little left at the end of term. Some people will breezily dismiss budgeting as a bore and tell you they aren’t that interested in money. Trust me, you’ll spend a lot less time dealing with, thinking about and worrying about money if you budget. The key here is ‘do it once and let the system take care of it’. Don’t budget and you’ll continually be firefighting and getting nasty surprises.
The choice is between spending a morning constructing a budget that will then run pretty much on autopilot, and serve you for three years. Or a nagging feeling that you don’t really understand your finances at all … and bank statements you don’t want to open. It’s your choice!
Of course, you do have to return to your finances every month or so to see how you’re doing. Again, the fact that you have a plan will make this a much easier and less painful exercise. And as things change, you can respond.
The key, you’ll not be surprised to learn, is to make income continue to exceed expenditure. If it doesn’t then you have two options - to raise the first or to cut the second. Now this may seem a stating of the obvious, but it’s apparently not obvious enough for most of us to graps (we Britons have the highest levels of personal debt in Europe remember).
So how to put money into the plus side. Part time working is an obvious option, and many degree courses offer ample time to do this. You don’t want work to be crowding out your study time of course, though ‘working your way through college’ is a tried and true American way of paying for a degree. As a rule, institutions tend to recommend you take on no more than 15 hours a week outside work. Consider selling your unwanted stuff too - ebay is the one everyone thinks of, but Amazon is great for buying and selling secondhand course books.
Back to the other side of the balance sheet, and how to save money. You may find you have to discard many of the luxuries you enjoyed at home - many vegetarians take up the lifestyle as much through frugality as for ethical reasons. For the same reasons, if you can’t cook then learn. And if you do your food shopping at Waitrose then it may be time to get acquainted with Aldi and LIDL.
But there are financial perks to being a student. Make sure you’re getting all the discounts and freebies you’re entitled too. Free banking is just the start - check the best buy tables at moneysupermarket.com for the best deals. But beware of people queueing up to offer you ‘cheap’ credit cards. 0% is great until it stops, but stop it will. Really, the only FINANCIAL advantage to a credit card is the month or so of free credit that you get when you take the card out … and you only get that once, the rest of the time you’re simply repaying last month’s debt. Better to learn to live within your budget.
The studentbeans.com website is a great source of student savings. An NUS Extra card will net you discounts at many big retailers, and check out our regular voucher code deals for big savings on just about everything.
And remember you’re not alone here. Find out if your college has a student finance adviser … your bank branch certainly should.
Tags: Student budgeting advice, Student budgeting advice article, Student budgeting, student, college budget, college, personal financial advice
