Many UK students are waiting with baited breath for their A level exam results. For many of you, going to university will represent the first time you’ve had real independence and responsibility. Part of this responsibility will be managing your money. In fact, student money matters rate highest of all things currently worrying students. If you have decided to take a student loan, you will be receiving three lump sum payments throughout the year, which you will have to manage; bills need to be paid and of course you need enough money to live and party. Getting it right financially is very important; being down in the dumps with money matters will not only make you miserable, but could affect your studies too. But don’t panic, there is some great student money tips in this article to ease you into student life.
When you reach 18 years of age, you begin to come of age financially and unfortunately, you become a prime target for banks. They want to sign you up as quickly as possible – after all, you’re soon to be a graduate with great earning potential! – and will offer you all manner of incentives and schemes, which more often that not, can be impossible to decipher and make comparisons between the banks. In the UK there are 11 financial providers providing student services. These will all include interest free overdrafts. However, it is important to remember when arranging your student money matters that not all student accounts are the same; in fact, they vary considerably. Get the low-down with our top 10 student money tips.
1. Don’t make any decisions based on incentives
One of the most important student money saving tips is to make sure you choose the right account. Making a decision based on freebies and incentives is not a smart money tip and could make things harder for you in the long term. Being a student, your overdraft will be the most important thing for you; it will enable you to survive! You should be sure to research the best overdraft deals rather than being impressed by free cinema tickets or CDs. The only exception to this student money saving tip is in the case of NatWest: if you live a long way from your university and will be doing a lot of travel, NatWest’s offer of heavily discounted rail travel should be considered. Freebies really shouldn’t be a sweetener for you when it comes to opening a student account; once you receive your NUS card as all students do, all manner of discounts will become available to you anyway.
You should also avoid any accounts which offer you a cash incentive, such as Lloyds TSB. While it may sound great to be given some free cash, nothing is ever free in life. If you read the fine print you’ll see that 80% of your cash incentive will only be given to you if you refer 4 friends to Lloyds TSB and they open accounts and deposit at least £200.
2. Choose the best account for your needs
Now that you’ve begun to look past the incentives and freebies, what features do students need with their accounts? This is really a question that can only be answered by you, but our student money advisors have come up with some things you should be thinking about.
Unless you’re one of a lucky few, as a student you are unlikely to be interested in what credit interest is on offer – you’ll be living in the red for most of your student days, believe me! So, student money saving tip two is to really research the overdraft facilities available – these really will vary from bank to bank.
3. Save as much as you can before you go to university
Having recently finished your A Levels I’m sure all you’re thinking about is letting your hair down and having a good time. However, you should think about doing some work during the summer break. If you can put just a little bit of money aside for your future it will make a big difference. A great money student tip is to make your summer savings work hard. Instead of leaving your money sitting in your current account earning a very poor rate of interest, you could consider investing it more wisely. We’re not talking about tying your cash up, but there are definitely more efficient uses for your hard earned cash. You should look at putting what money you can into a cash ISA which will give you interest at over 6%. Even better for students, money earned in interest on an ISA is completely tax free!
4. Budget and stick to it
Part of the university experience is learning how to manage your money. It can be so easy to just draw £10 or £20 at a time without giving it any thought; this will however soon add up! If you let your spending run away you could find yourself without any money to pay bills and to enjoy your time at university.
It may sound boring and I bet your parents have already bored you to death with this topic, but setting a budget is an important aspect of student money matters. More impotently however, is having the discipline to stick to your budget. Our student money advisors recommend that you should try to incorporate a 10% ‘what-if’ allocation in your budget. Run through your total income and your total expenses and you can see what money you have left to enjoy yourself.
5. Use your student loan wisely
You should receive your student loan payments three times throughout the academic year. The first instalment should reach you around the same time you start university, during fresher’s week. This can be the most dangerous time for student finances; every club will try to sign you up, you’ll want to go out with your new friends and you will of course be caught up in the excitement of being at university. Try to keep your head and don’t blow all your cash really quickly – you’ll be stuck with no cash until your next loan payment and believe me, from personal experience, it is no fun having no money at university.
6. Be cautious of credit cards
This is the largest of all student money matters and can cause serious amounts of grief if mismanaged. I unfortunately had to find out about the dangers of credit cards myself. I quickly overstretched myself, couldn’t pay the bills and find myself in quite a bit of trouble. In fact, despite graduating many years ago, the mismanagement of my credit cards still affects me today. The problem is that you may be offered several cards, with what appear to be small limits, normally in the range of £500. However, with a very limited income as a student, even paying this small debt off can be a challenge. The best student money advice we can give surround credit cards is only take one for a specific purpose – emergencies, for example – don’t get one just for the sake of it. Most importantly, please remember that if you do find yourself in financial trouble, you are not the first and you certainly won’t be the last. If you are struggling with credit card debt you should get help as soon as possible. Don’t ignore the problem. Speak to you university and get help. Don’t ignore the problem – it most definitely will not go away.
7. Make use of online banking
Modern technology has made it much easier to keep a check on your finances. More often than not, all your student money matters can be dealt with through your online banking facility. Make sure you login a couple of times a week and look through all payments which have left your account. If you see a payment which you don’t recognise, you should call your bank immediately to have it investigated.
8. Don’t run away from your problems
I touched in this when discussing credit cards. However, it is so important that it definitely deserves its own spot in our top 10 money saving tips for students. It is likely that during your time at university you will run into financial difficulty at some point. It is so important for you to face any problems you have and deal with them as quickly as possible. Not only will this stop any charges from getting out of control, but it will help you to quickly eliminate the stress from your life. There are a wide range of sources of money help for students, from either your bank, your university or online. If you are approaching your overdraft limit and know that you will exceed it, speak to your bank. Unarranged borrowing will cost you a fortune. It is much cheaper to ask them to temporarily extend you overdraft, normally for a charge of around £20. Do the right thing, pick up the phone and speak with your bank, don’t hide away from your problems. Remember that all your financial activity will be recorded on your permanent credit file and unresolved issues at university can come back to haunt you in later life. I can’t stress this enough – don’t make mistakes like me, be responsible with your money!
9. Protect yourself
Just because you’re having the time of your life away from home and at university, don’t let your personal security lax. There are some simple steps you can follow to secure your student money. Don’t ever ask a friend to go to the ATM for you or let anyone use your card and PIN. Recent surveys have found that around 70% of all students allow their friends to use their card. This is very bad practice. You should also ensure that you properly dispose of your receipts and any communication from your bank. Student money advisers would recommend you to keep your bank statements, but if you wish to dispose of them, invest in a shredder to ensure financial security. Identity theft is sadly on the increase, but if you are aware of the issue, you can take measures to protect yourself. As an extra security precaution, we’d recommend that you keep your correspondence address as your parent’s address. Living in shared accommodation presents a real opportunity for identity theft; by keeping your confidential documents as far away from prying eyes as possible can be real help.
10. Buy insurance
Many students will choose to ignore this option – do so at your own risk! You may think your stuff is safe in university halls, but unfortunately thefts do happen on campus. You will probably be provided with details of great student insurance rates from specialist companies as part of your university welcome pack.