The Freshers guide to financial survival
Starting university is an exciting adventure. You’re probably living away from home for the first time. There are interesting people to meet. New subjects to get to grips with. And that’s before you even start thinking about all those freshers’ parties.
Trouble is, it can get very expensive, very fast. According to our research, students spend £465 on average during Freshers’ Week alone. And, by Halloween, 25% have run out of money.
So how do you stay on top of your finances and make your money last, without feeling like you’re missing out? We’ve provided you with some tips you’ll need to make sure you navigate your first year at university with a bit of money in your pocket.
You need a budget
It goes without saying, but when you’re living on limited income, budgeting is critical. Yet, according to our research, 20% of students have never created a budget. And, out of those who’ve done so, 33% have trouble sticking to it.
But staying on budget isn’t as hard as it sounds. The trick is to make it as realistic as possible.
Here’s how to go about this:
Find out how much money you have
Tot up your student loan, pocket money, any savings and the income from your part-time job. Depending on your situation and course, you may also qualify for a grant, bursary or extra financial help.
Keep in mind that your student loan is paid in three installments at the start of each term. So, while you may think you’re flush, that money must last until the start of the next term. For this reason, it’s worth dividing it up and using just a portion of it each month.
Make a list of essential expenses
These will probably include:
- Tuition fees, books and equipment
- Your living costs — rent, utilities, broadband, mobile phone and groceries
- Transport costs
It’s worth setting aside the money for these expenses in a separate bank account. That way, you won’t have to worry about having enough to cover important bills.
Budget for the things you love
Making a budget doesn’t have to mean setting arbitrary limits on what you can spend. In fact, doing so can make it harder to stay on track, because it can feel like you’re making too many sacrifices. Instead, try prioritising what’s important to you and cutting back on the stuff you can do without. Look at it this way: eating less takeaway food won’t just make you feel healthier, it’ll also free up more money for a night out.
Here are five tips to help you spend more mindfully.
Not all debt is created equal
Unless you win the national lottery, it’s pretty hard to avoid debt when you’re a student. But while some debt, such as your student loan, is designed to stay manageable, others can turn into more trouble than they’re worth.
In particular, steer clear of payday loans. These usually have sky high interest rates, which means your debt can quickly spiral out of control. Similarly, interest rates on student credit cards aren’t usually very attractive. So, they’re not suited for carrying long-term debts.
That said, using a student credit card little and often — and paying the balance in full each month — can help you build a history of good borrowing behaviour. And this will help improve your credit score.
Overdrafts aren’t ‘free money’
According to our research, 27% of students consider their overdraft to be an extension of their current account. And 19% think it’s free money. Unfortunately, this couldn’t be further from the truth.
As helpful as it can be when you’ve got limited funds, an overdraft is a type of loan. And, eventually, you’ll have to pay it back.
More importantly, if you’re not careful, you may get hit with expensive fees and charges. Here’s what you should watch out for:
- While many banks have interest-free student overdrafts, these offers only last for a limited time. Once the offer period is over, your overdraft will start collecting interest.
- Interest-free offers only apply to a pre-arranged amount, called an authorised overdraft. Anything over it, called an unplanned overdraft, can attract eye-watering penalty charges.
- Your bank will review your authorised overdraft limit regularly. They may increase it, but they may also decrease it.
While it’s not the most exciting read, it’s a good idea to go through your bank’s terms and conditions carefully. That way, if you have to use your overdraft, you’ll avoid paying unnecessary fees.
Embrace the lifestyle
Your income might be limited, and you may have to carry some debt. But being a student also means you can save big: there’s lots you can get for free or at generously discounted rates. Here are a few tips:
Always carry your student ID with you
This proves you’re a student and entitles you to a ton of discounts — from low-priced food, transport and haircuts to money off clothes, tech gadgets and more.
Save the Student has a comprehensive list of places where you can get student discounts. But if somewhere you like isn’t on the list, it’s still worth asking them. You never know.
Consider pre-loved items
Need furniture for your room? Or an expensive textbook? You can find lots of good quality stuff for free or very cheap on Gumtree, Freecycle and even Facebook groups.
Look out for freebies
Sign up to freebielist.com or the Save the Student newsletter to be the first to know about free stuff — from makeup samples and drinks to Amazon vouchers and more.
Enjoy free entertainment on campus
Last but not least, you don’t have to break the bank to enjoy a night out. Most uni campuses host regular gigs, comedy nights, film nights, parties and more. And you don’t have to pay a penny to get in.
So go forth, enjoy your time as a student and save as much money as you can.
But don’t forget to hit the books.