So you’ve done it. You’ve got the A-levels, you’ve secured your place at university and you’re raring to go.
In the excitement of moving away from home and starting a student life on your own, it’s easy to push finances to the back of your mind. But if you’re moving away from home and standing on your own two feet, then it’s important to take steps to help financially prepare for this new era in your life. Here are our top tips to help you make the most of your money when you’re a student.
1) Switch bank accounts
Choose a bank account that suits your student needs. Many banks offer student packages with lots of deals and freebies. If you’re going to need the use of an overdraft, then go for an account that offers the biggest 0% overdraft deal. Always make sure you make overdraft payments on time to avoid hefty charges.
2) Get your credit score in check
Before applying for overdrafts or any other form of credit, make sure your credit score is the best it can be. See our tips (Nine ways to improve your credit score today) to see how to check your file and maximise your creditworthiness.
While at university, make sure you keep up with the bills – missed payments will have a detrimental impact on your credit rating which can stick for years after leaving university.
3) Council tax exemption
If you are going to share a property with other students, or live alone, you will not have to pay council tax. If you are living with a non-student, then as a household you will be entitled to a council tax discount. Check on Gov.uk to see what discount you can get on the council tax bill.
4) TV licence refund
If students move back home for the summer then they could get a refund for part of the TV licence. TV licensing states that if you won’t need your licence again before it expires, and you have at least one complete month left on it, then you can claim a refund. It’s worth putting a note in the diary as a reminder to do this before the first year ends.
You can also avoid paying it altogether if your parents have one, as long as you are viewing on a gadget not on an aerial. You can see the full terms here.
5) Start budgeting
If your parents have been supporting you up until now, then budgeting is something you really need to get used to, to avoid running out of money. Take time to look at what money is coming in and calculate all your necessary outgoings. Set a realistic budget for food, bills and of course having fun. Don’t blow your entire student loan during freshers’ week — you will regret it.
If you need a helping hand with budgeting, then apps on your smartphone are a fantastic way to keep on track. We’ve put together a list of some top apps to help to budget and make the most of your money – Seven money saving apps everyone should have.
Lots of retailers offer student discounts, so make sure you take your student ID when you go shopping. And don’t be shy to ask, you’ll be surprised at the number of places that will happily knock something off.
6) Don’t overpay tax
Many students take on some kind of part-time work to fund their university life. If you decide to do this, then make sure you don’t over pay tax. Anyone earning less than £11,500 a year shouldn’t have to pay tax. If you are automatically charged tax via pay-as-you-earn (PAYE) then you may have to reclaim it. You can reclaim tax via HMRC.
7) Learn to cook
Learning to cook some basic meals from scratch, will save hundreds of pounds on your groceries. The cost of ready meals and take-aways can add up, and do little for your health, but you can eat well and cheap with the right skills. Take a look at Cooking on a bootstrap, run by Jack Munroe, which is full of recipes (not just beans and toast) which will cost you less than a pound to dish up – some as as little as 42p!
7) Get the best deal on your utilities
When renting, don’t just accept the energy tariff you have been given. Shop around for the best deal and switch. It could save your household hundreds of pounds. Your landlord can’t stop you from switching, but it’s a good idea to inform them. Utility bills can quickly stack up in the winter months.
8) Financial help?
To help with living costs, you can apply for maintenance loans; you could get up to £11,002, but how much you get depends on where you study and your household income. University fees amount to around £9,250, but there is financial help for that too by applying for a tuition fee loan.
The loans do have to be paid back, but you don’t have to worry about paying them back until you graduate and start earning over £21,000 (£1,750 monthly) and then 9% over that amount is taken from your earnings each year as repayment. If you never earn over £21,000, you don’t pay.
If you earn £22,000, then you repay 9% of the difference between what you earn and the threshold. In this case, the difference would be £83 a month and your repayment would be £7 a month.
If you go on to earn £25,000, your repayment per month would amount to £30. If your earnings reach £35,000, your monthly repayment would be £105, at £45,000 a year, your monthly repayment would be £180 and at £50,000 it would be £217 per month.
These repayments should be manageable and it is worth remembering that repayments are made from gross income, ie before you’re taxed, which lightens the load even more.
Lastly, if you haven’t paid off your debt after 30 years, it’s wiped clean. Unless you start earning an exceptionally high wage early in your career, there’s a strong chance you’ll never repay the totality of your student debt.
Interest rates on student loans will rise to 6.1% from the Autumn term, up from 4.6%. The rate is applied to loans as soon as they arrive. According the Institute for Fiscal Studies, students will have accumulated £5,800 in interest charges by the time they have graduated. Although the interest rate may seem high, the Department for Education said student loans provided protection that other lenders do not, such as not having to repay anything until you earn over £21,000.