Budgeting is a vital part of getting to grips with your finances and while living on a limited student income it could be the key to avoiding financial difficulties. Knowing exactly how much money you have to spend is the only way to avoid overspending.
Today it is common knowledge that when you graduate most students will have debts. Debt is now an unavoidable part of student life but good management will help keep it under control. Some people may say why bother going to university? Why not just get a job and start earning? A good degree can improve your chances of obtaining a satisfying and well-paid job, and it can also advance your career prospects. Going to university can be a great experience, it can be fun and it can also give you the opportunity to develop a wide range of personal and social skills, as well as study an area of knowledge in some depth.
Student loans and interest-free overdrafts can be an essential part of financing your future career. Any other borrowing should be treated with considerable caution. Working out your income and expenditure may help avoid you getting into debt. Draw up a budget and try to stick to it – this may be old, very boring advice, but it is really worth taking stock of. What is important to remember is that if you run up debts (other than student loan and authorised overdraft) and you end up missing payments on bills or paying late this, then will have an adverse affect on your credit rating and you will have problems in the future obtaining credit or a mortgage.
Rent will probably be the largest regular payment that you have to make out of your income. Most landlords want at least one month's rent and deposit in advance - make sure you get receipts for these. Avoid renting property which is too expensive for you and renting for periods longer than you need (e.g. through the summer if you are not staying in the property). If you to decide to rent with friends, agree in advance what you will do if you fall out with each other or if any of your number fails to pay their way. This not only includes rent, of course, but also bills.
There are a number of schemes available that are designed to lessen the impact of paying these bills all in one go. Savings stamps are available from gas and electricity showrooms. You buy them weekly then hand them in with your bill. You can use the budget payment scheme through which an average monthly payment is worked out and debited automatically from your bank account (customers who use this form of payment pay the cheapest rates for gas and electric).
After a year, the difference between what you have used and what you have paid is worked out and your payments for the next year adjusted accordingly. You can also spread payments by using a coin or charge card meter, but bear in mind that this is the most expensive payment method.
Beware of estimated bills. Check the reading on the bill and if there is much difference between them get in touch with your electricity and gas supplier and ask for an actual reading to be done. Also, when you move in to a new property always contact the utility companies to let them know. Otherwise you may well get a bill that belongs to previous tenants.
A telephone can often seem more hassle than it is worth, especially if you are sharing with other people. You can help keep the costs down by calling at cheap rate - throughout the weekend or after 6.00pm during the week (including international calls). You can rent telephones that work like a call box (i.e. pay-as-you-go) or ask the telephone company to make your telephone incoming calls only. But do shop around as some telephone companies may be able to offer you better prices.
Mobile phones can be very expensive, so think carefully before buying one. For budgeting purposes, some students buy pay-as-you-go mobile phones as there is less chance of receiving a large bill at the end of the month.
It may be worth buying a student bus pass (lasts for 10 weeks, currently £69) covering your travel to and from University. You can then use this pass at any time of the day and night and at weekends. However, if you are just travelling to and from University most days, then it may be a lot cheaper to buy an all day ticket (currently £2.60) or a 10 journey flexi-ticket for £9.50. You can also obtain a Student Rail Card (£26) and/or a Coach Card (£10), which will entitle you to cheap travel in the UK (over longer distances) for up to one third off normal prices after 9.30 am. You need to buy one of these cards at a railway station or coach station. If you can plan ahead, you can get cheaper travel the further in advance you can book.
If this is the first time that you have had to buy food for yourself, try to buy food at one of the large supermarkets, as the prices tend to be more reasonable.
Credit cards / personal loans / store cards
If you can avoid having one, then do. It is easy to lose track of how much you are spending and end up with a large debt. If you do not settle up at the end of each month you can find yourself only ever paying the interest and never clearing the debt. Do not get tempted into committing yourself to big purchases, which are way beyond your budget. It might look like a reasonable weekly/monthly repayment figure but it can be a big chunk out of your finances. Interest rates can be as high as 37% APR.
An overdraft is now an integral part of student life. Banks are only too happy to provide you with a student overdraft. Check what each bank has to offer and go for the best deal don’t just go for the one that has the best freebies on offer. It is essential to have a bank account in the town in which you are studying.
If you are a student living away from home and use a television set in your lodgings, you will need a television licence. You can buy a television licence at any Post Office or pay by direct debit. You can be taken to court and end up with a large fine if you are caught without one.
This is something on which many students economise. However, if you make this decision, consider the cost of replacing your belongings if they are damaged or stolen - you may consider that not insuring them is a false economy. Special policies are available for students. Bear in mind that 25% of all recorded burglaries in the UK occur at student residences.
Most full-time students are not eligible to free prescriptions, dental treatment or eye treatment.
However, you can apply for an exemption certificate and, dependent on your income and expenditure, you can get help with up to 100% of these costs. To apply obtain ‘Help with Prescriptions’ form HC1 from Student Services or your doctors' surgery.
If you are assessed as having to pay tuition fees you can pay the University in one or more instalments. Paying in instalments is not available for overseas students. You should contact the Finance Office for further details.
- avoid temptation (credit cards, store cards, personal loans...)
- help yourself by maximising income (using budget payment schemes, only making cheap rate telephone calls, claiming any benefits you are entitled to)
- set yourself a realistic budget and keep a close watch on where your money goes. If possible, keep a record of what you spend
- understand and take responsibility for your personal finances
- if you know you are getting into financial difficulty, please contact the advisory service
When money, or the lack of it, starts causing you problems, seek professional help. Contact Student Services for an appointment with an advisor. Don't let your debt get out of hand.
Top tips for dealing with debt
Get advice, talk to someone, contact Student Services and maybe the Counselling Service too, as debt not only affects your bank balance but also the balance of your emotions. See a student adviser if the debt is external or is with the University, e.g. accommodation bill, tuition fees or library fines.
Things to consider:
- open your post
- don’t ignore court summonses
- get in touch with all your creditors (the people you owe money to) straight away and explain your difficulties, in person, by letter or over phone. They will be much more sympathetic if you get in touch with them and are seen to making an effort to sort out your difficulties
- don’t just exceed your overdraft without letting the bank know. If you do they may demand your cards and chequebook back or the whole overdraft
- if the first person you speak to is unhelpful, ask to speak to someone more senior who may be able to agree to what you want to do
- don’t give up trying to reach an agreement even if creditors are difficult
- always keep copies of any letters you send or receive
- use a personal budget sheet to show to your creditors as proof of your difficulties and to use to make an offer of payment. Advisors in Student Services can write to creditors for you and they may respond better to headed notepaper
- only make repayment offers that you can realistically stick to, even if it appears very small
Don’t panic and ignore the problem because it won’t go away and it may well get worse. The sooner you tackle it, the sooner you can start to sort the problems out. Get in touch with us immediately, as we can help you.