With around half of students saying that they run out of money before the next instalment of their student loan, what can you do to make sure you don’t end up in debt at university?
Budgets may seem boring, but they’re the foundation stone of all debt-free households. Most UK students will be living on their own for the first time when they start university. This means you’ve probably always had the luxury of relying on someone else (Bank of Mum and Dad) to make sure that the rent, utilities and food are always taken care of. Unless you’ve already made your first million by the age of 18, (in which case, congratulations), you will now be responsible for your very own household of one, for the first time ever. Budgeting is simple logic – it’s a clear way of working out what’s coming in (and when), and what’s going out (and when).
The classic way of planning your budget for the year is simply to use an Excel spreadsheet. You can download one here for free.
Excel is thorough, tried and tested, but it’s not portable, which means it’s easy to forget what you’ve spent that day by the time you open your computer again. This is where budgeting apps come in. We like YNAB (You Need a Budget), an app that promises you’ll ‘feel some financial peace.’ It’s easy to use, and promises to keep you out of debt.
You’re a human being, and this means you can’t survive without shelter, food, water and warmth. If you’re in halls for your first year, you’re in luck because these four live-or-die ingredients are most likely bundled into your accommodation fee. If not, you’ll need to be very clear on how much these essentials will cost, and make sure that you always pay for them first.
You’ll be bombarded with leaflets promising all kinds of rosy interest-free overdrafts and discounts the minute you land at Freshers’ Week. However, it’s best to begin with the intention of never being overdrawn. You can keep your budget rock-solid by streamlining your money according to two categories:
A) Have one account to receive your loan/grant/sponsorship installments. This is the account you’ll use for your direct debits and any other bill or rent payments. Don’t carry the debit card from this bank account with you – freshers are bombarded by offers that can be hard to resist, but they’re not really bargains if you end up in debt before January. You need to keep this money safe, because it’s paying for the roof over your head and the food in your mouth.
B) Open a Soldo account and use your Soldo MasterCard for all of your day-to-day spending. Once you’ve done your budget, you’ll know exactly how much money you need to leave in your main bank account to make sure that your essentials are covered. You’ll also know how much money you have left to spend on food and fun (which can sometimes be the same thing). Set up a weekly standing order from your main account to your Soldo account, and you’ll have a fixed weekly spending budget attached to a simple app in your pocket. The app allows you to set budget limits, so you’ll be notified if you accidentally spend more than you planned.
If your parents are contributing to your upkeep at university, they can also set up a standing order to your Soldo account. Alternatively, they can set up a Soldo account in their name, create a wallet in the app, and give you a Soldo MasterCard in your name. As attractive as independence is, it can be helpful to know that someone more experienced (who has your best interests at heart), is there to support and guide you, so that you always remain within budget.
Freshers (and students in general) are offered discounts and special offers galore. You may not have much money now, but most companies are banking on you having more money in the future, and they want to recruit you as a loyal customer right now. But just because something’s cheap, doesn’t mean it’s a bargain, particularly if it lands you in debt. Cheap and affordable are two very different things. Be clear on what you need, what you don’t need, and when. Having said that…
Your NUS card offers rich slurry of discounts. Some will be tempting yet financially imprudent, but there are some good ones out there, such as 10% off at the Co-op supermarket.
There’s no way of removing food from your outgoings, but you’re in luck. There are lots of ways to monitor prices to make sure that you always pay as little as possible for your food shop. We like the mySupermarket app because it finds discounts on groceries you already need, rather than using a ‘bargain’ as a way of making you buy something you’d never even considered. All you do is create a shopping list, and nominate the supermarket/s you’d like to price check, and the app will (literally) tell you where to go. If you’re not into apps, just make sure you shop around, and plan in advance so that you don’t impulse buy.
Remember: it’s not a bargain if it lands you in debt.
A lot of students find that impromptu coffees (etc.) on the way back from lectures can add up and quickly become a habit, and a guilty one at that. Budgeting for fun not only means that you won’t overspend, but also that you will enjoy your treats without the pounding heart that goes with knowing you’ve plunged too deep into your overdraft.
Universities will normally have their own online noticeboards for part-time student jobs, and you should start checking these as soon as you arrive. Unless you’re studying something like medicine, it’s likely that you’ll have a lot of free time on your hands. If you’re brutally honest, it’s unlikely that you’ll spend all of that time with your nose in the books – so you may as well use some of that time to earn money. If you’re canny (or lucky), you may even find a part-time job that moves you further towards your long-term career goals. Having said that, even classic student jobs like waiting tables or pulling pints will give you transferable skills, and prove to future employers that you have a good work ethic. Working for your money means that you’re more likely to value it, and you may find you spend more carefully when you know how many hours’ slog each iTunes download will cost you.
Check if your parents’ household insurance will cover your contents while you’re away at university. If not, you should definitely insure them yourself. The extra insurance premium may be an unwelcome guest on your budgeting chart, but since student accommodations can be seen as easy-picking by opportunistic thieves, you need to stay on the safe side and make sure you’re not faced with the cost of buying a new laptop, should the worst happen.
Money management shouldn’t be the main focus of your time at university, but it’s a catch-22. If you don’t manage your money well from the moment your loan arrives in your bank account, then money will start to really weigh on your mind and you’ll find it hard to concentrate on what really matters. Clever financial management will really set you free.