Student money problems are not uncommon. It’s far too easy to make mistakes with your money while focusing on having fun and making the most out of the university experience.
Don’t panic if you run into one of these terrifying money moments – there’s always a way out. Here are six scary student money situations and how to deal with them.
- Running out of student loan early
- Funding delayed
- Not understanding any of it
- Credit card trouble
- Spending all your money on course costs
- Blowing money on a night out
The most common money problem students run into is spending most, or all, of your maintenance loan nearly as soon as it comes in. This happens for a number of reasons – the cost of textbooks, buying lots of things to set up your room and kitchen kit, the madness of Freshers Week, and often, not being used to making a large amount of money stretch for several months.
The first thing you need to do is stop spending. Completely. Find out where your money has been going – if it’s on clothes or tech, see if you can return them, and if you’ve been overdoing it on nights out, find a cheaper way of socialising, at least for a while.
Next, you need to find some money to live on until your next loan instalment comes in. If you feel comfortable borrowing from friends or family members, do it, and pay them back when you can. A part-time job will bring a small amount of income in, and there are plenty of other ways to make money.
Contact your bank, as you may be able to temporarily extend your overdraft to give you some breathing space. Your university should offer hardship funds if you have no other options, so contact your student union, or talk to your personal tutor.
One thing you must NEVER do, no matter how tempting, is take out a payday loan. They will give you cash quickly, but at a staggering cost, and with no real income you have no hope of paying it off. You could become sucked into a cycle of ever-increasing debt, and it really isn’t worth it.
Finally, prevent it happening again – draw up a budget and stick to it. Write down everything you have to spend money on, including your phone contract, energy bills, food shopping, eating out, socialising and transport. Once it’s on paper, compare it to your income: your student loan, help from family and any money from jobs. Draw up a spreadsheet if it helps. Look at where you can cut back, allocate funds to various categories, and work hard at living within your means. You can do it!
Student Finance is far from infallible, and if you’re unlucky your maintenance loan may be delayed, which can have a serious impact at the start of term.
First, check that your application was received and you remembered to reapply last academic year. Make sure you’ve officially re-enrolled at university, as this could be causing the delay.
Call Student Finance, with your reference number ready, and find out if your loan is on its way. Write down when you’ve phoned, so you can refer to it again, and you can sort out the problem. If it really is a late payment, all you can do is sit tight and wait, or try some of the advice in our last point to tide you over.
This might be the first time you’ve ever had to manage your money to this extent. It’s a huge responsibility and if you can’t tell your ISA from your elbow, now is the time to learn.
You could get yourself in trouble if you don’t understand the rules of your overdraft, how a credit score works or why your choice of student account matters. The National Association of Student Money Advisers has a list of useful links to help you out.
You may have gotten a credit card to help you meet costs, but it is a very bad idea when you have no proper income.
Common risks include getting caught in a debt trap and only being able to pay off your interest while making little impact on the debt itself, failing to pay on time because you need your student loan for other things, or relying on it so heavily the company extends your limit so you can spend even more.
The best way to avoid this kind of debt is to resist the temptation in the first place, but if you find yourself in trouble, focus on paying this debt off first. Cut back on everything you can afford to, ask family for help, and look at ways to make more money to tackle the loan.
Hidden course costs are the sneakiest and most common drains on your finances.
A classic mistake made by too many students is to head straight to the bookshop and buy all their course books brand new. As most academic books can cost anything from £20-£100 or even more, this is an avoidable mistake that could land you in debt. Borrow books from the library, or scour secondhand book sites like Alibris and AbeBooks, and keep an eye out for sales at your uni.
When the year comes to an end, you can sell these on again to raise cash for next year’s books.
We’ve all been there – waking up the morning after the night before and discovering an empty space in our wallet where cash should be. Once you’ve had a few drinks your inhibitions vanish and suddenly the best idea ever is to keep on buying drinks. Sore head, sore bank account.
Stop this happening in the first place by only taking out the amount of cash you plan to spend (including taxi/bus money), hiding an emergency tenner and your bank card – if you need to take it at all – in a different pocket or section of your wallet or bag. Limit your nights out for a while until you recoup the costs!