Managing finances can be one of the trickier aspects of coming to university. It’s highly likely that you won’t have managed your own money before, at least not at the scale you now have to. Rent needs to be paid, food needs to be bought, and nights out need to be not quite as expensive as they were during freshers when you thought it would be a good idea to buy a round for half the club.
My first port of call when coming to uni was to go to my bank and get my account switched to a student one. The main reason I did was to get a 0% interest overdraft. Overdrafts usually work in that when you go into it, the bank charges you various fees – a monthly fee as well as a daily one for however long you’re in the red in my experience. Being in your overdraft doesn’t make you look too good to lenders when you want a mortgage. Student overdrafts take away the charges for a certain amount, which varies from bank to bank. Mine is a £500 overdraft which I can increase by £500 yearly if I want to.
However, one thing I’ve seen from my friends and colleagues is the idea that because a student overdraft has no fees attached, it’s essentially free money from the bank. It is not. If you come out of uni with a three year history of being a grand in the red, banks aren’t exactly going to be your best friend. I use mine as a kind of emergency fund. I’m buying a car for my placement at the moment, and after paying the road tax, insurance, MOT and all that, I’m going to be slightly over my budget. But because I have my overdraft and a plan to get back into the black, it doesn’t affect me that much. As another side note, taking a card with a large overdraft attached on a night out can be quite a bad idea (read terrible).
Secondly, although I have mentioned that I’m buying a car, it’s because I need to drive to work and back for a year that I am doing so. I strongly wouldn’t recommend buying a car for standard university time, i.e. when you’re not on a placement year. If you do already have a car, great, but uni parking passes are few and far between so I wouldn’t suggest bringing it up (or down) with you so you can drive your mates to Aldi every weekend. Just get the bus.
My second part of my plan was to use my maintenance loan as rent money. This way you are guaranteed to have the funds to pay for the roof over your head, although the loan I got didn’t quite cover the cost of my Langwith room. I’m lucky enough to get monthly money from my parents, so I use that to pay for food, bills and spending money.
A big mistake I made during my first year was leaving all of my money for the term in my current account. All too often I looked at the balance and thought ‘Hey, I have loads of money, its fine to get a few takeaways this week and go shopping on Saturday’, without actually clocking on to the fact that the money had to last me two and a half months. Now, when I get the payment, I divide it by 10 and put 90% into my saving account. This means that only my spending money for the week is on my card and the rest is quietly gaining interest. Then, week on week I just transfer the 10% out as Monday rolls in.
Personally, student loans are the best thing the Government has given me in my 20 years on this Earth. I’ve been able to get through uni so far without having a weekend job, and although I know some people can’t do that, it’s worked out well for me. Before I came to uni, the majority of my friends were under the impression that loans put you in debt for the rest of your life, and that you have to pay them back straight out of uni. They were most definitely wrong. At the moment (2017), loans get paid back by way of for every £1,000 you earn over £21,000, 9% of that goes towards paying back your loans. If you get to 50 without paying them off entirely, the rest is written off. This is the current system, although it may change in the future! Next year I’m earning enough so that I’m paying a measly £90 towards my loans. It gets taken off before I get my pay check and so is really no worry at all. Student loans also don’t affect your credit score, so finding a mortgage, financing a car, or getting a credit card are all easily done even with taking out maintenance and tuition loans. Loans are great for covering costs while you’re still learning and take a great deal of stress off of either you or your parents.
All in all, managing money at uni can be a daunting task, but with a few tricks it can be as easy as spending it.