The Rough Guide to Money Management
There a lot of things you can learn at university – like how to cook, how to make friends with complete strangers and how much you alcohol you can stomach. Pay attention in lectures and you might even learn something academic too!
A peripheral skill you’ll probably pick up along the way is how to manage your money. Learning to live on a budget or learning from your financial mistakes is all part of the student condition.
But it doesn’t hurt to be prepared so that when you get there you’ve given yourself a bit of a head start. To that end, here’s MoneySupermarket’s rough guide to money management for students.
We say rough guide, because there’s no complete guide on managing your money. Nobody has all the answers. But, if you use a little common sense and restraint you won’t go far wrong.
Get a decent bank account
A lot of banks will offer freebies with their student accounts to get your business, and while some like things like a free Young Persons Railcard might be worth it, what’s more important is getting an interest-free overdraft.
Ideally you want to stay out of your overdraft completely, but if you are forced to dip into it you’ll at least want one which won’t cost you a fortune.
Some accounts’ interest-free overdrafts will be more generous than others, but remember there’s only so much overdraft you want because if you do use it, you’re going to have to pay it back at some point.
Often, student accounts tier their overdraft limits so that you get a larger allowance as time goes on. For example the NatWest Student Account gives you an overdraft of £500 in your first term, £750 in your second and £1,000 in your third.
Manage your money sensibly and hopefully you won’t have to venture this far into an overdraft, but it’s something to check when choosing your account.
If you don’t get an interest-free overdraft, exceeding your limit can be extremely costly thanks to unauthorised overdraft charges.
Think carefully about how you are with money – if you think a big interest-free overdraft could tempt you into overspending, go for a lower limit.MoneySupermarket
is one the many online aggregators you can use to help you weigh up your options.
Budget what you have
It’s one thing to say you’ll stick to a budget and another thing entirely to actually do it.
We won’t lecture you on how to split your money up and make it last, there will be plenty of time for lectures later, suffice to say you don’t need to be mathematics undergrad to work out your budget.
Basically, you’ll want to work out your income minus your outgoings divided by the number of weeks or months until you get your next loan or paycheque.
You should know how much money you have coming in or what you have in savings, and how often you get it.
When it comes to outgoings I always found it was better to overestimate, so that there’s less chance of nasty shocks. If anything you’ll be pleasantly surprised when you’ve got more money left than you expected.
Banks will practically throw student credit cards at you – but think carefully before signing up. It’s their money you’ll be spending and they’ll expect it back eventually.
If you think you’ll handle a credit card just fine, neveruse it to withdraw cash from an ATM. You’ll be charged an initial fee and then interest each day from the withdrawal until the end of the month – which can be very expensive.
Without wanting to be patronising, isn’t money management just a case of making sure you outgoings don’ exceed your income?
Just spare some thought before you spend. If you’re ordering takeaway, see if you can get it cheaper with a discount code. If your energy bills too high at your flat, shop around to see if you can save money by switching providers, and so on.