Advice For Credit Crunched Students

Posted on: 16 September 2008 by Gareth Hargreaves

Advice for making ends meet and managing money at university from Alvin Hall and more.

Managing your own money for the first time can be difficult. With the credit crunch biting and living costs rising, this year's students are likely to find it even harder to budget.

One in four young people starting university plan to live at home with their parents in a bid to save money, and a third couldn't afford to go to university without the option of staying with mum and dad, according to a report from Lloyds TSB Student banking. Those who do move away should live in university accommodation whenever possible to cut costs.

A quarter of students are forced to take jobs during term-time to make ends meet. Getting a part-time job is a good idea, which will improve that CV, as long as it doesn't interfere with studies.

Two thirds say that it will be difficult to afford university if the cost of living continues to rise. One in four are worried about managing their money during their studies and say that they would like further guidance.

Here Alvin Hall, independent financial expert, offers advice for managing a student budget.

Learn How To Budget

University may be the first time that you will ever have to manage your own money, but don't be afraid. Be proactive and get on top of your finances in advance. This might mean taking some time to go through your incomings and outgoings with a parent or guardian, or keeping a weekly spending diary to see where you could cut back. Either way, it will make sure that you're realistic about your finances right from the start.

Socialising Without Peril

University is the perfect time to make friends and experience new things, but that doesn't mean that you should throw caution to the wind and blow the budget in Fresher's Week. When you're having a great time hanging out with your mates, always try to be prudent and don't feel embarrassed to say that you can only spend so much - most of your friends will probably feel the same way.

Give Yourself Pocket Money

Just as your parents gave you a weekly or monthly allowance, this strategy will help you begin to think about and control your spending. On the same day each week, withdraw a fixed amount of money to cover your weekly expenses. Each weekly withdrawal must be for the same amount. This way you "regularise" your outgoings. If you start running low on funds you will, by necessity, begin to alter your spending. For this to work, you must resist all desire to go to the ATM early, borrow money from friends, or call your parents or other relatives for money.

Carry Cash

Only carry in your wallet the amount of cash you are allowed to spend each day. If you're a sucker for an afternoon latte or tend to get cash-happy on a night out at the pub, ration your cash on a daily basis. Not only will this stop you getting that final round in and blowing tomorrow's money, it will also allow you to save in advance for a special occasion.

Prepare Your Own Meals

That prawn and avocado salad from the local brasserie might have tasted good at the time, but a homemade cheese and pickle sandwich could be just as tasty at only a fraction of the cost. Making your own lunch is a proven way to keep your daily expenditures in check. Not only can you take advantage of special offers at the supermarket saving even more money and but you can also eat more healthily.

Be A Shrewd Shopper

Take note of fashionistas and don't look down your nose at a second-hand steal. Whether it's books or an outfit, buy any items you need at second-hand stores or during the sales. This will help you to stretch every penny and pound you have and will serve you well in life after university. Claim all available discounts using your NUS card.

Benefit From Banks

Take advantage of all benefits that come with the accounts that that many banks and building societies offer to university students. Importantly, do not abuse the overdraft facility that typically comes with these accounts. It is not free money; it is, in reality, a loan.

More money saving advice for students:

Credit Card? Take Care

Most student banks will offer you a student credit card, with a limit typically around £500. However tempting a credit card can be - treat it with caution. While the limits may be small, with no regular income even a few hundred pounds can be a struggle to repay, especially when the interest rates tend to be higher than average. If you do choose to take a credit card, use it to get the most competitive deals online, when travelling or in case of emergency - but don't use the card for the sake of it.

Fight Fraud

Living in shared accommodation, you need to take extra precautions to protect your finances from fraud. Following a few simple steps can reduce the risk. Always destroy any mail, which includes your bank details, and card receipts. A shredder is a simple and cost effective solution. Have your cards, chequebooks and other banking information sent to your home address, especially if your mail is delivered to a pigeonhole in a communal area.

Don't give your PIN or card to anyone! If you are subjected to fraud in the future, you will have to declare - and this can be taken to the police - that you are the only person with knowledge of your PIN. Never write down your PIN number and use your bank's ATM to change it to a number you can remember.

Online banking is an easy way to keep an eye on your finances, but do take care to ensure that when you are using a shared computer it's a secure site and that you sign off fully when finished.

Sources Of Funding

Student Loans

Unlike commercial sources of finance, Student Loans are funded by the Government. The interest rate is linked to the Retail Prices Index, which allows students to borrow finance at a rate of interest linked to the rate of inflation. This means the amount of money people pay back is equivalent to, in real terms, the amount they borrowed.

Career Development Loans

Career Development Loans are offered by banks, on behalf of the Government, at a subsidised interest rate. They can help pay for vocational education or training, although they are not normally available for first degrees.

Deal With Debt

Students often face financial difficulties, but you should never bury your head in the sand. If you let things get out of control, you must remember that financial mistakes at university are not wiped clean, and they can come back to haunt you later in life.

Specialist advisers in branch or at your university can help with hardship advances and give you advice and guidance. Speak to your student adviser early to plan your finances, and as soon as you are likely to encounter any difficulties.

If you are nearing your overdraft limit, speak to your bank as soon as you can. They may be able to help. Unauthorised borrowing can be expensive and may impact on their decision to help you in the future.

If you are in severe financial difficulty you can apply for Access Funds and hardship loans. Check with your college for more details.



Is your child going to be a 'fresher' this month and begin a university course? Or are your children returning for another term? Are they good at budgeting? Have you tried to educate them financially? How much can you afford to help with costs? You can share your experiences by leaving a comment below or discuss with others in the 50connect forum.

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