According to Lloyds TSB, the average student income, including loans, is just under £6,000, while more than half (51%) of full time students have had to take paid employment in the past academic year to bolster their income.
Jatin Patel, Lloyds TSB Director of Current Accounts, said: “It is more important than ever for students to take control of their money to help them budget their spending during university.”
So, how do you ensure that your income lasts the whole year? Well, you set a budget and you stick to it.
Budgeting
A budget is essentially a plan of the things you expect to have to spend money on and an allowance, based on your income, of how much you can spend on each thing.
Begin by writing a list of all your anticipated expenses, noting how much they will cost and whether they are for the whole year or just for term time. There are obvious things like accommodation, books, mobile phone bill and travel. Make sure you a realistic about how much you expect to spend on food and going out. There is no point in pretending that you won’t be spending money on socialising. Finally, consider any big, one-off expenses such as a holiday in the Easter holiday, a new laptop, or even Christmas presents for your family. These things can creep up on you if you don’t plan for them. Your course fees will be covered by your fees loan and even if you can pay your fees up front, it is worth taking this loan (see Types of Debt, below, for why).
Once you know your expenditure, you need to work out your income. Generally, this is the sum of your maintenance loan, any grants or bursaries, money that you’ll earn from working and any money from your parents. Once you know how much money you have coming in, you can decide how it should be split among your expenses, prioritising the most important expenses, like food and accommodation, first.
You should try to come up with a weekly budget for food, going out, clothes and so on, that accounts for the fact that you also have larger, less frequent costs, as well. Perhaps your rent is paid each term, so make sure you have enough in the bank when you need to pay this and that you haven’t spent all your money already.
Sticking to your budget
You might want to use one of the free online tools for budgeting or perhaps your bank has their own budgeting service. Lloyds TSB have developed a Money Manager that allows you to view your spending habits and keep track of your finances, categorising your spending into groups, such as eating out, clothes and entertainment. They will also send free text alerts, including limit alerts, high/low balance alerts and weekly balance alerts. However, a simple spreadsheet can do the same job and the most important thing is finding a method that suits you.
Make sure you are taking full advantage of any student discounts. NUS Extra gives discounts with over 80 popular high street and online stores such as JJB Sport, Warehouse, Amazon, ASOS, Odeon plus many more and could save you up to £500 a year.
However, do not instantly assume that a student price is the best price. Be vigilant and shop around. MoneySavingExpert.com says: “Always remember 'they want my cash' and look with a sceptical eye; you'll make better decisions. Do your research. It's easy to assume mobile phones, supermarkets, gym membership, TVs, gas & electricity bills, car and home insurance and other prices don't vary too much - but they do.”
It is also worth following Martin Lewis’s two mantras: “For those who are skint; do I need it? Can I afford it? Have I checked if it’s cheaper elsewhere? For those who aren’t skint; will I use it? Is it worth it? Have I checked if it’s cheaper elsewhere?
“If the answer to any of the questions is no, don’t buy it!”
It is important not to fall into the trap of receiving your student loan instalment and thinking that you are suddenly rich. Receiving £1500 in one lump sum can make the prospect of a shopping spree and big night out very tempting but in a few weeks time, when you have run out of money, you’ll realise that it is important to spend slowly and wisely.
Help is on hand
Remember, although your finances are your responsibility, there is help out there. Your university will have a student services department with advice on how to budget properly and to help you if you get into trouble. Your university’s students’ union will also be able to help you and on top of this, speaking to other students and your parents may be useful.
Sophie Richardson, President of Queen Mary Students’ Union, said: “With costs increasing it is more important than ever for students to budget properly. Although this may seem daunting there is a lot of help on hand. Drop by your students’ union or student services department at your university to find out how we can help you.”
There are also some useful online resources. Endsleigh insurance have developed a website called Student Tips, offering free financial advice on everything from budgeting to saving money on your food bill.
Vicki O’Connell, Communications Manager at Endsleigh Insurance, said: “By creating a website for students, written by students, we can offer tips, opportunities and suggestions of how to maximise your time at University.”
Types of debt
Finally, a word on the different types of debt that are out there. If you have enough money to pay for your fees or living costs up front then it is still sensible to take the full maintenance loan and tuition fees loan. This is because both of these loans have 0% interest while you are a student. In this time, the money that you would have spent to cover your costs can be put into a high interest ISA. Once you leave university, you can remove your money from the ISA, pay off your student debts and walk away with a profit. This, therefore, is good debt.
There is also bad debt, such as a student overdraft. Although this is also 0% interest while you are a student, it is likely to rocket to a high commercial rate of interest as soon as you graduate. Similarly, credit cards and commercial loans are to be avoided.
For more advice on debt and financial solutions, visit your university student services department or speak to your students’ union.
Managing your finances may seem like a scary prospect but with prudent planning you will be sure to overcome any concerns and happily live within your means. Your finances should not constrain your time at university but instead be wisely put to use to ensure that you get the most out of your life as a student.