Five tips for controlling student finances

Your student days may be far behind you but I bet you know someone for whom the struggle to get out of bed and to lectures on time without mum’s forceful encouragement is a daily occurrence. And I’m willing to make another bet: Even the most independent and resourceful of university students will be struggling to juggle the costs of tuition, accommodation, utilities, purchasing course books and materials, buying Christmas presents, and paying for various hobbies. Not to mention the all-important beer budget.

The university holiday, which is now just weeks away, is a good time for all students—whether an undergraduate returning home after their first semester, a ‘seasoned’ postgraduate pursuing additional qualifications, or a mature student who’s opted to ‘go back to school’—to pin down their spending habits and assess their financial needs going forward. So below you will find five top tips to keep the student in your life on the financial straight and narrow.

1. Don't stick your head in the sand
Work out exactly what your incomings and outgoings amount to and hopefully the former will exceed the latter. But don't worry if it doesn't, just read on. Start by writing down all your weekly, monthly, and per-semester outgoings. Be honest. If you spend more on beer than you do on food then perhaps you need to reassess your diet but that’s a separate task. For this one, try to be as accurate as possible and if you’re unsure then err on the side of caution, i.e. inflate your estimate—better to have a nice surprise at the end of the month than a nasty one.

Also write down what you ‘earn,’ whether it is in the form of a student loan, a maintenance grant, financial help from family members, part-time jobs, or savings. This should be easier as most students’ income comes from a few, regular and trusted sources, while outgoings are generally in dribs and drabs to a wide range of sources.

Once you have a total for both incomings and outgoings, work out an average for each month of study (if you have no intention of getting a summer job or earning income during other holidays then divide your total by 12). Hopefully your monthly outgoings are smaller than your incomings but I doubt it. In which case, move on to tip number two.

2. Research what funding is available to you
Many students give up part-time work during the final year of their course to focus on getting the results they want and so this can be a time when even more students are struggling financially to make ends meet. Achieving the grades you think you deserve is stressful enough without unnecessarily worrying so make sure you’re up to date with the government’s various offers of finance. You may not be aware that in addition to the ubiquitous student loan, the government also offers grants (which do not need to be repaid) for students from low-income families as well as additional help for those with learning difficulties or dependents. The DirectGov Web site offers plenty of information on what funding is on offer, as well as online and downloadable application forms.

Universities and colleges also offer bursaries, which do not have to be repaid, to students who are struggling financially. Hardship funds are decided on an individual basis so if you really need it, there’s no point in not applying.

Your university’s student welfare department should also be able to inform you about extra funding available to students in special circumstances or even studying particular subjects.

Many organisations also offer scholarships, not just for academia but also for sports or specific areas of study. Your local library should be able to provide a list of scholarships available.

3. Accept that student debt is the norm
It’s virtually impossible these days, unless you have a very generous benefactor, to get through a university degree without entering into a little—or in most cases a lot—of debt. But while debt is something we would all rather stay away from, student debt comes at a lower cost than most other debt and should ultimately help you to secure a larger salary in the long run.

On top of the student loan and any other government-funding you may be eligible for, high street banks hungry for student business offer interest-free overdrafts up to varying set limits. It’s not a trick: the banks are hoping that you’ll stay with them even when you’re raking it in; but be aware that once you are no longer a student you will be hit with the bank’s commercial rate of interest and also make sure you know what the charges are if you go over your overdraft limit. You can ask your bank to remove the facility that allows you to stretch this limit—it may be embarrassing to have your cash card declined but it’s a lot cheaper than forking out up to £30 each time you unwittingly overspend.

Borrowing beyond this from a financial institution is likely to get costly. Unless you’re vigilant and comfortable with paying off a credit card balance each month, relying on such forms of borrowing to finance your student lifestyle is a slippery slope into costly debt. Many students do it but most find themselves pushing valuable funds in the direction of interest payments rather than course books. This article offers tips on reducing your debt.

4. Earn when you can and save when you can
You may think that the three-month break over the summer is designed to allow you to recuperate after a hard semester’s partying but if you spend at least part of this time earning you will have a lot more fun—and a lot less worry—the following semester. In my student years, myself and a group of friends would spend the first and last few weeks of the summer relaxing and the remaining working intensely. Usually in rather unpleasant jobs but doing it together meant we were all in the same boat—and all found ourselves in similar financial positions once term-time returned. Plus, it’s true what your parents say: it is character building!

Depending on how much you’re able to earn in the holidays and from part-time work during the term, you may have the opportunity to maximise your savings. An ISA (individual savings account) is a great way of saving and also allows you to take advantage of pound cost averaging. Many accept minimum payments of just £1 and in return offer annual interest rates of up to 4.25% currently.

5. Live within your means
It’s simple really: if you can’t afford it, don’t buy it. There are plenty of money saving tips for students out there, including collecting online discount vouchers, taking advantage of student (NUS) card store discounts and buying household essentials in bulk. Most importantly though, is the ability to budget. Habits that you pick up now will be hard to break later so train yourself to stay on top of your finances and you’ll reap the rewards in the long run. This downloadable budget planner is a good place to start.

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