Study hard at your finances
One of the most important lessons to learn in your first term is how to stick to a budget
A COUPLE of weeks ago we looked at the best way for students to make sure that all of their valuables were insured when they left the family home to go to university or college.
I promised to come back with some advice on the best way for students to get to grips with their money after term starts and they are settled into their courses. It is really important to get a handle on your spending as early in the term as possible, especially if you are away from home for the first time. Research seems to suggest that many students spend the majority of the money that they have in the early part of their first term. Part of this is due to the pressure to go out and mix during Freshers’ Week and part of it is the expenditure that is required at the start of the term for books and other course materials. That is why it is so vital to look at your budgeting as soon as term starts and work out how much you can afford to spend each week. You should also make sure that you take into account the likely increased spending during the first couple of weeks of term. One bank recently came up with some figures suggesting a total spend of just over £3000 during the first 100 days of term, with the majority of that going on rent, food, travel and course materials.
Interestingly, just over £600 of that amount was spent on alcohol and nights out but these figures are probably artificially high for this period given the impact of Freshers’ Week.
It’s unlikely that this level of spending on entertainment could be maintained right throughout the first term and would reduce in subsequent terms.
The research also suggested that more than 25 per cent of students will borrow money, use a credit card or dip into an overdraft facility before the end of the first term – and this is why it is so important to look at ways to save money as early as possible.
Set a budget and decide how much money you can afford to spend each week on food, clothes and entertainment and stick to it once you have decided.
It’s very easy to go to the hole in
See if you can save money by buying course materials from other students who have completed the course you are doing, or look into the possibility of sharing with friends rather than buying too many copies of everything.
the wall during a night out and just take out more money, and contactless payments have made it easier to spend money without really realising that you are spending it, so try to avoid that as well.
If you are going to borrow, then you need to understand the amount of interest that you will pay on any credit card that you use.
Although bank base rates are really low at the moment, some credit cards still charge up to 30 per cent APR, and this can add a huge amount of interest to the money that you borrow, especially if you don’t pay it all off straight away. And if you are going to use an overdraft make sure you ask the bank first of all.
Don’t just go overdrawn without the bank’s permission – this could cost a fortune.
Now that we are on the subject of banks, one of the biggest decisions you will have to make is to decide which bank to use.
They will all want your custom and they will dangle lots of carrots in front of you to make you want to open an account with them.
Look carefully at what you are being offered. Will you use the vouchers that the bank is offering? Does the bank offer an interest free overdraft? Does the account include insurance for phones and gadgets?
You also need to check the interest rate that the bank pays if you are lucky enough to have any money in the account and you should look at whether you can carry out most or all of your daily banking activities online, rather than having to go into a branch.
Millions of ex-students use the same bank for decades after leaving university or college so the choice you make now is an important one and you should spend a bit of time on it to make sure that you get it right – or as right as it can possibly be for you.