Are you financially prepared for university?
Around 1.25 million young people across the UK are set to become university students over the next few weeks, and many of these will be managing their money independently for the first time.
Given endless headlines about student debt, it’s hardly surprising that three quarters of students are worried about cost of university life, according to a Nationwide poll. The building society’s research found that students’ average monthly income is £752.20, equivalent to around a third of their expected living costs of £2,197.
Here, we explain some of the ways students can ensure they are as financially prepared as possible for their time at university.
Cashback offers from Hargreaves Lansdown for 2024 - savings, investments and pensions
The importance of budgeting
One of the most important starting points for students is to devise a budget, to help reduce the risk of over-spending.
Charlene Young, pensions and savings expert at AJ Bell, said: “Work out what your crucial expenses are, including things like rent, study materials, utilities and food that you can’t go without. It’s also worth checking whether you are covered by your parent’s home insurance for contents and possessions.
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“Once you’ve totalled them all up you can deduct that amount from the sum of money you’ve got to work with, which could come from your loan, grants, employment income or gifts from family. For students it will often make sense to break things down term by term and then set out a weekly budget with spending limits. That allows you to keep track – if you overspend a little one week you can cut back slightly the next.”
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Pick the right student account
Banks usually bend over backwards to tempt students to open bank accounts with them, typically offering a range of tempting incentives to encourage them to sign up. Bear in mind however, that it’s usually the interest-free overdraft that’s most important, as students will often find themselves in the red much of the time.
For example, Nationwide’s FlexStudent current account offers £100 cashback and 12 months of Just Eat vouchers worth £120 – providing £220 of benefits to students in their first year of university. The account also includes an interest-free and fee-free arranged overdraft of up to £3,000 by the third year.
Santander’s Edge student account also offers generous perks, allowing accountholders to claim a free four-year 16-25 Railcard worth £100 which means students get you a third off rail tickets. The account also provides a £1,500 0% overdraft in years one to three, provided you register for online banking and pay at least £500 into your account every four months. Those opening an account before 30 September will be entered into a prize draw, with 20 students due to win £27,750, the equivalent three years’ worth of tuition fees, and 30 students in line to win £9,250, the equivalent of one year of tuition fees.
The Money and Pensions Service (MaPS) offers a bank account comparison tool which allows students to compare student bank accounts so you can select the best deal to suit your individual circumstances.
You still have time to sign up for student loans
If you haven’t yet sorted out student loans to help you cover the cost of university fees and living costs, don’t despair as there is still time to apply.
Students can apply for funding up to nine months after the first day of the academic year. For example, those on a course starting between August 1 and December 31 this year have until May 31 to apply for finance.
How much maintenance loan you’ll get depends on where you’re studying and your household income. You can check the Student finance calculator at Gov.uk to find out how much you are eligible to get.