Student Budgeting and Your Student Account
Student budgeting isn’t likely to be the first thing on your mind when you go to university. But, used in tandem with a student bank account, it can make your finances a lot stronger, and life a lot easier, as you earn your degree and have fun (not necessarily in that order).
Going off to university is not only the next step in your education, but possibly the first time you will have taken full responsibility for your own finances.
This can feel as intimidating as it is exciting. Student loans and grants appear as lump sums in your bank account, so it is down to you alone to portion it out responsibly.
It may not sound like the most thrilling idea when you are in the flush of freshers week, but student budgeting can prevent you from getting into some sticky situations down the road, while building up good financial habits for when you leave university.
And you may find it easier to manage your finances if you are using a student bank account.
Student budgeting 101
One of the best things about getting to grips with budgeting as a student, is that all of the lessons and tricks you learn at university will be applicable as you grow older and fully enter the working world.
First, you need to add up all your incoming money. You need to also be aware of when this money is coming in: is it weekly, monthly, or term by term? This could include, but is not limited to:
- Student maintenance loans, grants and bursaries. This is any money coming from student finance, or the university itself. Your student maintenance loan – different from the tuition fee loan, which will go straight to your university – will likely be the biggest lump sum, and is usually paid out three times a year on a term-by-term basis.
» MORE: Student Loans
- Money from parents or family. If you are fortunate enough to receive regular financial support from your parents, guardian or other family member, you should factor that into your budgeting.
- Earnings from a job. If you are working while at university, you should also take into account any earnings from that job.
Once you have worked out your ‘incomings’, it is time to tot up your outgoings. These are all the non-negotiables that you need to spend money on. Again, you need to account for whether these costs are daily, weekly, monthly or term by term. Outgoings may include:
- Rent. This will probably be your biggest outgoing. If you are living in university accommodation such as halls, you can either pay for it up front in one instalment, or in three term-by-term payments to match your maintenance loan. If you are living in private rented accommodation, however, you will usually need to work your budget around monthly rental payments.
- Utilities. If you are living in private rented accommodation, you will need to account for water, gas, electricity and broadband bills, split by the number of people you are living with.
- Food. Although your food spend will vary from week to week or month to month, it is still wise to set aside a fixed chunk of money to make sure you are trying to have a healthy, balanced diet.
- Phone contract. If you pay for your monthly phone contract, it needs to be on your outgoings list.
- Books and equipment. Depending on your university course, there may be certain books or equipment, which you need to buy.
- Transport. If you regularly need to pay for transport to get to university, whether it is by car, bus or train, then you should factor that into your budget.
The difference between your incomings and outgoings will be the amount of money you have to spend in a week or a month, depending on how you have structured your budget, on non-essentials.
This will cover everything you do as a student that isn’t studying or sleeping, from nights out and cinema trips to clothes shopping and more. When you can, you may even want to consider setting some money aside for savings.
By creating a budget, and more importantly sticking to it, you will know you have your essentials covered – or where you need to tighten your belt – and exactly how much you can spend on all the fun stuff.
» MORE: How to budget your money
The benefits of a student account
To help you manage your money, and stick to your student budget, it is worth considering a dedicated student bank account.
Not only will this give you a single place to track and monitor your money, with a debit card that can be used online, in store and at cash machines, but it also comes with a number of benefits.
Most student accounts will include an interest-free arranged overdraft, with the maximum limit often increasing as you move through the years of your degree. Be aware, however, that once you have graduated, your overdraft will no longer be free, though you can potentially move to a graduate account with a continuation of your interest-free overdraft for a fixed period of time.
You should also carefully compare banks, as each will usually be offering specific perks if you open a student account with them. This could include free access to academic libraries, cash paid into your account when you open it, cashback at various retailers, restaurant discounts, or a free 16-25 railcard.
Certain banks will also consider you for a student credit card alongside your student account. Remember, debt can quickly mount up with a credit card if you don’t meet your monthly repayments.
If you are an international student, however, you may find it more difficult to secure a dedicated student account. Instead, you may need to apply for a standard UK current account.
How to use a student overdraft
One of the main features of a student account is an interest-free arranged overdraft. This means, if you need to spend more cash than is in your account, you can borrow money up to your stated, pre-agreed limit without paying any interest on top.
You will have to pay the money back at some point, however. When you graduate, you may be able to transfer to a graduate account, which also offers a 0% interest rate for a fixed period of time, in order to help you repay any money you owe.
A student overdraft can appear both as a temptation to spend more than you have, and something to fear going into for worry of getting in debt.
However, used sensibly, it can be a helpful tool when you need to cover an urgent bill or rent payment before your next maintenance loan instalment comes in.
It is best to think of your overdraft as a fail-safe for an unexpected situation, rather than free money to spend on whatever you want.
More ways to stretch your student budget
There are a number of ways to stretch your student budget, on top of monitoring your income and outgoings.
Student discounts and freebies
One of the best things about being a student is the amount of free deals and offers you can secure with your student card.
Most cinemas will offer discounted student tickets, while services such as Amazon Prime and Spotify have cheaper tiers for those in full-time study, often with generous free periods.
Many retailers will also offer percentage discounts to students with a valid student card, or TOTUM card, Student Beans or Youth Discount account.
Before you buy an item or take part in an activity, it is always worth checking first to see if there is a student discount available.
Council tax exemption for students
If living in private rented accommodation, and everyone there is a full-time student, then you do not have to pay council tax. It is important that you let the council know, and apply for an exemption.
If you need to travel a lot by train, it is worth investing in a 16-25 railcard. For £30 a year, or £70 for three years, you can save as much as a third on your train journeys.
If you live in London, you can pair your railcard with your Oyster card in order to get discounts on Transport for London services.
Young Persons coachcard
If you are aged 16 to 26, you can also take advantage of a Young Persons Coachcard, which offers a third off standard and fully flexible fares at any time. This costs £12.50 a year or £30 for three years, plus £2.50 postage.
A good way to save some money is to try to shop secondhand, including both charity shops and online retailers. This can be especially good for buying course books or equipment.
Food waste apps
One way to save on food costs, while building a more sustainable lifestyle, is to look into food waste apps. Some will point you in the direction of surplus food you can pick up for free, while others will allow you to save and collect food for a discounted price that otherwise would have been thrown away by restaurants or retailers.
One way to save money if you live in private rented accommodation is by trying to cut down on your energy consumption.
Some examples of how to save energy include turning off electrical appliances when not in use, washing clothes at lower temperatures, and only heating the rooms you are using.
You should also make sure to compare energy tariffs to find the best price for your student household.
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Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more