When you set off to university, your first term will be full of excitement – your new course, your new friends, and your new social life. And your student loan will be in the bank. This may well be the largest lump sum of money you’ve ever received, but you’re going to have to resist the temptation to blow it all before your Freshers’ Week hangover subsides: unless your parents are both well-heeled and generous, this money is going to have to last you a whole term.
Set a budget
No-one’s suggesting that you should stay in every night, eating only supermarket own-brand baked beans, but you need to be realistic about just how much money you can afford to spend on drinking, partying and the non-essential aspects of student life.
Work out your income for the term: your student loan, any earnings you may have from a part-time job, and any other grants you might receive. Then deduct the cost of your accommodation – most halls of residence will ask you to pay your rent for the term upfront, which will make budgeting a little easier. Price up the cost of the books you’ll need for your first courses, your travel costs and any other unavoidable spending (do you really need that upgraded phone?). Then divide the amount you have left by the number of weeks in your term – and that’s your weekly budget.
Take into account that you’ll need some spending money in the holidays, too, even if you’re returning to your parents’ house, and if you’re living in privately-rented accommodation, then your term’s budget is going to have to stretch further until the next instalment of your loan arrives. Plan in advance for the holidays, and don’t leave it until the last minute to try and find a Christmas or summer holiday job.
Set it aside
If your whole term’s budget is too easily accessed, then it’ll be equally easily spent: out of sight, out of mind. First choose a good current account – check out details such as overdraft limits and charges, rather than being swayed by free gifts and special offers – and then put the bulk of your loan into a savings account. You can then set up a direct debit for weekly ‘payments’ from this into your current account. Put any one-off windfalls – birthday or Christmas present money, for example – into your savings account as well.
Internet-based accounts will be simple to manage; keep track of your cash in and out, and if your bank offers such a service for free, sign up for text or email alerts which will warn you when you’re about to go into the red. Monitor your spending carefully: make a note of your weekly expenditure and find out where your money’s going – you may be surprised, when you see the figures. Those take-out lattes and café breakfasts soon add up. An old-fashioned pen-and-paper ledger may work for you, though there are handy online calculators and spread-sheets on the UCAS website, for example.
Use credit carefully
If you are prepared to be disciplined about your spending, and will be able to pay off your balance, choosing one of the best-value student credit cards may help you spread your costs and be useful for larger purchases such as books, train tickets for long journeys, or necessary electronic items. To help build a positive credit history, you could get a simple credit builder card with sensible credit limits. Whatever you do, make sure to look around for the top credit card deals, and make sure that you are fully aware of the penalties for running up too much debt on credit cards before you sign up to any agreements. As a student it may be quite difficult to find an appropriate credit card, so be sure to check your eligibility before filling out a credit card application.
And remember that a credit card may be a good way of spreading your payments, but bear in mind that you will be charged interest if you do not pay off your balance in full, and late or missed payments may mean you lose any promotional rates and affect your credit rating.
A credit card may be a good way of spreading your payments, but bear in mind that you will be charged interest if you do not pay off your balance in full, and late or missed payments may mean you lose any promotional rates and affect your credit rating.
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