Personal Finance Tips for Students

There is no question about it; being a student is expensive. Gone are the days of lounging around with a large grant cheque to spend. Today’s students are hard-pressed to cover all their expenses over a minimum of three years. Then, on top of that, they are left with a large student loan to pay back and possibly an overdraft of staggering proportions too.

Managing finances is hard for students as this is often their first foray into the ‘real world’ where parents are not on hand to monitor expenditure or provide food and comforts. Finding out just how expensive everything is can be a nightmare scenario come to life, especially when a student discovers he has hit the bottom of his overdraft halfway through the month, and he can’t cook.

With some careful planning, students can avoid disastrous debt. That’s not to say university won’t be expensive, but if managed properly finances can be kept under control.

Here are some tips to help students through.

Save money in the summer

Students may have a mountain of course-work to plough through, but getting a job should be high on the priority list. If the student is able to move back home and work without paying any rent then so much the better. A summer job can be the make or break factor for a student’s finances. Be it bar-tending, shelf-stacking, or if they are lucky, something related to their future career, that pay-cheque can keep a student afloat. Yes, it’s tempting to spend time relaxing, or going to sunny holiday destinations and festivals with newly found friends, but summer is time for work, work and more work.

Work in term time

If at all possible, students should give some thought to working alongside studying. As well as being a regular injection of cash, it can add interest to a CV. Most colleges and universities have job-shops which advertise part-time student work. Even a few hours a week can make a difference to keeping students in the black, or at least close to it.

Choose the right student bank account

Banks are actively trying to snaffle students with offers of reduced train travel, overdrafts limits the size of a national debt, and free budgeting services, but the student should pick carefully. A large overdraft facility can be useful, but it isn’t free money and will need paying back, possibly even before landing a first job.

Pick an account that allows increase or reduction of an overdraft limit gradually. Banks are aware that the account a student opens will likely remain their bank account for years to come, so they are keen to get of hold of them. Wise students will use this to their advantage. Some banks offer graduate loans at preferential rates too, which can be useful when that first ‘car for work’ purchase is required.

Be careful with credit cards

Only use credit cards as an emergency, and that doesn’t mean using one to pay for a summer ball outfit. Interest rates on credit cards can be extortionate, and missing payment fees mount up alarmingly. Student accounts may offer a preferential student credit card for occasional use, but this needs to be paid off in full before graduation when the interest rate will shoot up.

Budget: Boring but important

If a student doesn’t look at incomings versus outgoings, then how can he hope to stay on top of finances? It’s very important to budget money and not blow the loan installment or wages in one session at the Student Union. Budget for tuition fees, rent payments and food (be realistic, take-away pizza every night is expensive). If students are renting a shared home in their second or third year then utility bills will need to be taken into account. Don’t forget the TV license! Whatever is left over is disposable cash. Split it into four weekly amounts and try not to go over.

Check your balance

A terrifying yet important task is to check a bank balance at least weekly. Debit cards are the norm these days, but expenditure can run away with itself when hard cash is not handed over. Keep receipts, and add up what has been spent as it leaves the account. Don’t wait until the debit card is declined.

Students need to take control of their finances even before the first term has started. It is very easy to think that loan installments, or gifts from mum and dad’s bank look enormous, but it won’t take long to disappear. Running out of money is no joke. If tuition fees or rent don’t get paid then it can lead to course drop-outs. Be sensible about it, don’t spend unless you have to. Take advantage of sales, and supermarket shop in the evening when items are reduced. It will be worth it when that graduation day comes around.