Guest post by Steph King
Student life can often be the first point of exposure to the realities of living independently and this can be quite an eye opening experience for most students who have not lived/provided for themselves previously. That means having to pay bills yourself, and managing your own expenses. The better your understanding of personal finance and managing your finances as an individual, the likelier you’ll be to thrive – and the better your prospects are likely to be as you make your way forward in life.
The Importance of Budgeting as a Student
Your student finances should be built around a budget. This doesn’t have to follow any particular format. But it should provide an overview of your expenses and income. If you find that you’re spending over the odds on something that’s not providing you with value, then you can cut that part of your budget.
Budgeting is not only something that is helpful as a student, but also something that will follow you for the rest of your life! So it is always good to understand and learn early what are some of the best ways to manage your income and financial situation correctly. Thankfully, there are plenty of different online budgeting tools available for free that can assist you with managing and understanding your weekly/monthly budget in more detail.
Finding the Best Deals for Student Living
There might be some areas of discretionary spending that you aren’t able to dispense with entirely. For example, you won’t be able to stop paying for your water or energy, no matter how expensive it is. But you can often lower the cost of the essentials by shopping around.
Broadband for students is a great place to start as this is something that you are definitely going to need, especially as a student. The other bills that you’re going to have to consider, some of the providers can offer discounted rates to students, but it is worth researching and looking around for more information on how to find the best deals. If you can push down your bills by even a few pounds each week, you’ll have more money to devote to your personal priorities.
However, depending your student living situation, you may not have to pay for your bills as they may be included within your weekly/monthly payments. For example, Halls of Residence usually include water, energy & broadband within their costs making it easier to understand what is going out on a weekly/monthly basis. But, if you do have to organise your own providers and aren’t sure what to do, universities usually have student advice/information you can use to help and provide assistance.
Understanding Student Loans and Repayments
In order to pay for your studies, you might have taken out a student loan. But it’s important to realise that a student loan isn’t like any other form of finance. It’s actually a subsidy that you won’t repay until your income rises over a certain threshold. For the UK, there is currently four types of plans that you will be assigned to when you start paying your student loan back, For example, ‘Plan 1’ loans, this means repaying 9% of your earnings over £24,990.
However, if you have a ‘Postgraduate Loan’ you’ll pay 6% over the threshold, with the threshold being £21,000.
Again, this can be quite confusing to understand but Student Loans Company can hep with understanding the loan more; or if you think you’re applicable for a refund, which can happen if you are on the incorrect plan!
Building Good Financial Habits for the Future
You can think of student life as a place to build the habits that will support your prosperity later in life. This might mean setting aside money each month for savings, whether it is only a few quid or greater, every little helps before spending on things like pubs, restaurants and takeaways.
If you can make your money work for you, and take pleasure in stashing cash away, rather than splurging it on expensive trinkets, then you might stand a better chance of achieving financial independence earlier in life or even help you better understand financial management. This will allow you to focus on things that really matter to you, whether it is saving up for a big purchase or wanting to improve/bolster your savings for a rainy day.
Money can be a major source of stress when it’s allowed to run out of control and this is throughout your life, not just as a student. Be proactive, and start learning more about financial management to ultimately help you avoid any debt or payments that you can’t justify. Don’t allow yourself to be peer-pressured into buying things that you don’t need and can’t afford.
