How to Manage Your Money When You Are a Student
Below you will find answers from the finance expert to the most frequently asked questions about money management in university.
Q: Is it late to apply for student finance?
A: No — but you should better hurry up! You have an opportunity to apply for student finance up to nine months after beginning your course. However, note that your application can take up to six weeks to process.
Q: How will I receive the student loan?
A: The maintenance loan is paid at the beginning of each term into your bank account. This does not include additional funds you might receive from your university if you are eligible for further financial support.
Q: What costs should I consider?
A: First, rent, and essential bills. Among them are all-inclusive in most student halls and some student houses and private accommodation blocks. Otherwise, you will have to organize payments for broadband, gas and electricity, water, streaming services, and TV.
To give you an idea of spendings, an average student pays around £30 to £35 per month for their essential bills, but you can pay less if you use less water/energy and reduce TV or streaming. And keep in mind your personal bills, such as mobile contracts and subscriptions. You may also have travel and course expenses. Plus, student insurance is strongly recommended for things like laptops, antivirus software, and a hard drive to back up your work.
Q: Do I have to pay tax?
A: If you get a part-time job, you will have to pay income tax if you earn more than £1,042 monthly and national insurance if you earn more than £183. The employers deduct these costs from wages through Pay As You Earn. If you make money online, you keep the first £1,000 as your trading allowance, but beyond that, you have to contact HMRC.
Q: How to organize the bills?
A: Let your suppliers know that you have moved in as soon as possible. Provide them with accurate readings of your meters, so you do not have to overpay for estimated readings. After getting a handle on usage and needs, switch to better broadband and energy deals through a comparison website. Look for shorter contracts if you will only stay in the house for nine months and pay by monthly direct debit rather than annually — this will let you save some money.
Figure out how much each housemate owes and create a system for paying up. For example, you can pay into a joint account or use a bill-splitting application such as Splitwise. Make sure to share accounts only with those housemates who always pay timely to avoid damaging your credit rating.
Q: How to make the student loan last?
A: Budgeting is the only thing that works here. Figure out how much your rent, bills, and contracts cost every month and subtract that from your maintenance loan. Then transfer that amount into another bank account once you receive your loan. If you have an opportunity, leave an additional £100 in there for unexpected expenses.
The remaining loan can be divided into a weekly sum. Now you know how much you have left to spend. Additionally, consider opening another account for non-essential spending with a digital-first bank. They provide budgeting tools and instant alerts when you use their cards, so you know where you spend your money.
Q: How to save money?
A: Get an NUS card and figure out whether you can get a student discount with every retailer you use. Besides, check out discount schemes offered by StudentBeans, UniDays, Totum, and Young Scot in Scotland. Consider going to second-hands. Cook your own meals instead of eating out. Use such non-perishable goods like beans, lentils, tinned veggies, canned tomatoes, grains, pasta.
Q: What if I struggle financially?
A: First, turn to the money advice service within your university: they will point you towards hardship funds and bursaries. Additionally, you can qualify for universal credit if your income is low. If there is a need to borrow extra, your interest-free overdraft is better than expensive credit cards or loans. But remember that you will need to pay it back within several years of graduating. Try not to exceed the interest-free zone. Eventually, do not be afraid to get help from some debt charity like Stepchange.