3 September 2015
Savvy spending on a student budget
It’s that time of year when thousands of students will be gearing up to their first term at university. After receiving your A Level results, next on the agenda will be securing halls of residence, buying all the homeware essentials and most importantly getting your finances in shape before leaving home.
While it may be tempting to let your parents do all the organising, there are plenty of ways to get a quick handle on your money and plan your own budgets, building those all-important budgeting skills in the process.
We’ve got some essential tips for the few weeks leading up to university, and once you’ve arrived and settled in.
Choose the right bank account for you
The best accounts are those that understand the student situation, particularly the constant fluctuation of money going in and out. Many banks will try and draw students in with ‘freebies’, but it’s important to look beyond this initial incentive and concentrate on the account’s key functions.
Whilst it would always be best to complete University with no overdraft, as you will have to pay it off after, we understand that a number of students will need one at some time. If this is something that you will need or feel you may need then aim to get the biggest and longest guaranteed 0% overdraft. Once you have your overdraft in place, its crucial you don’t go over the limit or you could end up facing huge charges. You should also seek to clear your overdraft as soon as possible to maintain a healthy credit record.
Expect the unexpected
Knowing what your monthly outgoings will be, and when they will leave your account, is a great way of staying on top of your finances. But undoubtedly there will be costs you didn’t necessarily account for. Whether it’s joining a sports team, buying university books or travelling to visit friends or back home, it’s important to bear these unexpected costs in mind every month. Forward planning as much as you can will help you account for these costs that might crop up, but it’s worth being prepared for the unforeseen outgoings.
Give yourself a monthly allowance and stick to it
It’s important to have a monthly allowance to keep on top of your finances. But the size of your allowance will depend on a number of things, for instance; the costs of your student accommodation, essential outgoings like your phone bill or TV licence, and also the city you live in. Universities in London will massively differ in expenses compared to Plymouth, for instance. No matter what the allowance, the important thing is to do your sums properly and budget for all likely costs (with a little leftover for the unexpected).
Remember, university is a hugely enriching experience, and you don’t want to be a hermit for three, four or five years while studying. Allow for socialising in your allowance too.
Credit card: should you apply?
The decision to have a credit card should not be taken lightly as you will still need to have money coming in to pay off your bill. The balance outstanding should be cleared where possible and you should be paying more than the minimum amount each month. Using an interest free overdraft should also be a first port of call before a credit card.
But there may be times when you really do need a credit card over a debit card and if used correctly, you could get yourself a good credit rating in the long run. Some banks will offer a credit card as part of their current account package. The key with a credit card is management of the debt and knowing your limit.
Equally important is never using your credit card to withdraw money, as you will be charged a withdrawal fee. There are some (even now) that are only too willing to help people get into debt. Make a considered decision before jumping into applying for a credit card, and remember it all has to be paid back.
Make the most of the discounts
As a student, you’ll be privy to plenty of discounts, so make the most of these where suitable for your needs. For instance, a student rail card will give you a third off the standard price of most rail tickets – if you know you’ll be travelling a lot through university, either home or to visit friends, this is a very worthwhile investment with big potential savings over the course of a year.
Elsewhere, an NUS ‘Extra’ card, at £12 per year, will give you a discount on shopping, eating out and some tech. Whereas dedicated websites, like StudentBeans, will offer e-vouchers for anything from stationary to food.
It’s unlikely you’ll have access to such a vast amount of discounts again till you’re retired, so make the most of them while you can!