8 top tips on student budgeting

When we talk about student debt, a lot of people think about tuition fees. But there’s more to it than that. Today we’re thinking about the other debts students can get into while they’re studying – and whether they can avoid it through budgeting.

Last year, research by MoneySuperMarket found that the percentage of university students using payday loans had gone up by 136% over the last decade. They also found that 36% of students relied on a credit card.

And when you think about it, it’s not surprising. Managing a budget on a low income is hard enough whatever your circumstances. But what if you’re a young person starting university? This might be your very first experience of learning how to budget, and it comes when:

• you have very limited time available for paid work
• your main income – your student loan – lands in your account in three large chunks per year
• and you’re being aggressively targeted with adverts for credit cards and loans.

In this environment, learning how to budget rather than borrow is a bit like learning to swim when you’re already in the deep end. The good news? Develop budgeting skills now, and they’ll stand you in good stead for the rest of your life. Here’s how to start.

#1 Choose your bank account wisely

Many banks offer great deals for students, usually in the form of large interest-free overdrafts. (Overdrafts are changing. Most customers will find it hard to get interest-free overdrafts in the future. But they’re still on offer for student customers, at least for the time being!)

This can be a useful, low-cost buffer. But don’t forget it’s not free money forever! It’s borrowing and you’ll have to start paying it back after you graduate.

Some accounts also offer other perks, such as railcards. You can compare student bank accounts and choose the best deals at MoneySuperMarket.

#2 …and consider having more than one

Why have two separate bank accounts? You can use one to pay your rent and bills by Direct Debit or standing order, and the other for your daily spending money. If you have your loan and any other income paid into the first account, this will make it easier for you to budget, and harder for you to overspend.

#3 Plan ahead

OK, it’s not exactly fun. But all it takes is about half an hour per term, a few minutes a week and a moment or two before every night out. Use this time to work out how much money you have, and how you’re going to spend it. You can save yourself a lot of hassle if you do.

Plan each term

How much money do you have, or will you have coming in? Add up your student loan, any grants, bursaries, scholarships, any income from work, and anything else you’re guaranteed to receive this term.

Then add up all your outgoings. This is likely to be a much longer list! It’s important to take a little time to include absolutely everything you can think of. The more complete your budget, the better it will work for you. Include:

• Money you must pay your university. This may include your accommodation and supplies for your course.
• Bills. This includes your mobile phone. And if you’re renting privately rather than living in halls it will also include your share of the rent, TV Licence and utility and broadband bills. Never paid these before? You can find an idea of how much you’ll have to pay on the Money Advice Service website. Or talk to students from the years above yours to find out how much they pay. This will also include insurance – see tip #7 below.
• Food and grocery shopping. Do a realistic trial shop at the beginning of term at your nearest budget supermarket. This will give you an idea of how much you’ll need to spend.
• Travel. If you have a car, include all your car-related outgoings. That means the car insurance, tax, petrol, and any payments you’re making on the car itself. If not, find out how much it costs for a weekly, monthly or term-time travel pass around your university town or city. And budget for any train trips you’re going to be making back home or to visit friends. (You can save a lot of money on train tickets by buying them a few weeks in advance. This is another reason why planning your expenditure at the beginning of each term is a great idea!)
• Leisure activities and your social life. Include going out; your gym membership and any magazine subscriptions; a reasonable budget for new clothes and haircuts, and so on.
• One-offs. Are you planning to buy anything, like a bike or a new laptop? Is Christmas coming up, or a trip to a festival?

Add up a term’s worth of outgoings. If it adds up to more than your income, you’ll need to find something to cut out until and unless you can start bringing more money in (see tip #5). Be realistic here. It can seem easy and virtuous to decide you’re going to walk everywhere instead of getting the bus, or that you’ll only go out drinking once a week. But the harder it is to stick to your budget, the more quickly you’ll lose control of it.

Adjust your budget until you have enough money for all your termly outgoings. Work out how much you’ll need to leave into your account to cover termly and monthly essentials like tuition, rent and bills. Then divide whatever’s left by the number of weeks in the term, and you have your weekly budget.

Plan each week

If you have two bank accounts, you could set up a weekly standing order from your ‘rent and bills’ bank account into your ‘day-to-day spending’ account. That way, you’ll regularly receive the money you need in order to cover your food shopping, travel, socialising and so on every week.

Then, take a few minutes every week to remind yourself what you have coming up. You could use a budgeting app like Emma or Money Dashboard to keep track of how much you’re spending in which category. Or if you think contactless debit card payments might make it too easy for you to go over-budget, you could keep it old-school. Withdraw your weekly funds from a cash machine and sort them into envelopes – one for food, one for transport, one for a night out and so on. Remember to keep your envelopes somewhere safe if you’re going to try this.

Plan your night out

Making a plan before you go out with your friends might sound like the opposite of fun. But it only takes a couple of minutes, and it helps you stay safe as well as avoiding spending more money than you have to. It just takes a few simple steps:

• Charge your phone!
• If you’re going to need any cash, take some out from a machine that won’t charge you
• Work out how you’re getting home. If you’re getting a cab, make sure you keep some money aside to pay for it. If your plans change, how will you make sure your friends know where you are? Plan ahead to make sure everyone is safe.

#4 Shop savvy

Try to get into the habit of making a meal plan and doing a big weekly shop rather than just buying for each meal at a time. You’ll usually spend less that way. You’ll often be able to pick up big discounts if you shop at the end of the day. Ask around to see if any other students have spotted the best time and place to get reduced food and drink.

Other second- and third-year students from the same course as you may also be a good source of advice on where to get your textbooks: buying them brand new is often extremely expensive, but the university library will often run out quickly. Check local libraries, eBay, Amazon, noticeboards both on and offline, and secondhand bookshops local to your university, before you buy new. Also, don’t forget you can rent many books online: check out sites like VitalSource.

#5 Make the most of student discounts

As well as your TOTUM card, you can find additional discounts on websites like Student Beans. Local shops might have their own discounts too.

Also, it’s not exactly a discount, but you can apply for free prescriptions, dental treatments and sight tests through the NHS Low Income Scheme. This isn’t something students get automatically, but many students will be eligible because of low income. You can find out more and apply on the NHS website.

#6 Don’t over-tax yourself

Of course, if you’re able to do some paid work during your holidays or even during term-time, this will help boost your budget, and your CV too. But if your income varies, you’ll often have more tax taken out of your wages than you should be paying. Check the government’s website to find out how to claim a refund on tax you’ve paid.

It’s important to balance any paid work during term-time with your course and the rest of your life. We like this article on the NUS website about how to balance working and studying.

#7 Don’t skimp on insurance

When you’re trying to cut costs, it can be tempting to think you don’t need to insure your stuff. But areas where a lot of students live can be magnets for burglars. It’s far cheaper to insure your phone, laptop and any other valuables than it is to buy a new one if it gets lost, stolen or damaged. Check whether you’re covered by your parents’ contents insurance policy, or by your university halls. If not, ask your housemates to split a home insurance policy between you.

#8 Get help if things start getting out of hand

Maybe you’ve followed all the steps above and still found your spending getting out of control. Or maybe by the time you’re reading this article you’ve already run out of money, or borrowed some from a payday lender with no idea of how to pay it back.

Whatever the situation, don’t panic! It’s never too late to sort things out. Your options include:

Try to earn a little more

If you’re regularly spending more than you’re earning, see whether you could pick up an extra shift or two – or even a pay-rise.

See if your university can help

If there’s been a sudden change to your financial situation or if you’re desperately short of money, your university and/or students’ union will usually have a hardship fund you can apply to.

Tell your family what’s going on

It’s hard to admit you need help. But most people would hate to think that a family member is struggling and doesn’t want to tell them. We know not everybody has parents who are able and/or willing to lend them money, or to pay off some of their debts. But if it’s an option for you, don’t be afraid to ask for help. For one thing, a family member might be able to help you look at your budget and make some changes so that it works for you.

Talk to us

You should try to do any or all the above before taking out high-cost credit like a payday loan. But if you’ve already taken out multiple debts and you’re struggling with the repayments, it might be time to get expert help with your debts. The Money Advice Service can help point you in the right direction – and take a look at our debt solutions page [link] for an idea of the kind of help that’s out there.

Thanks for taking the time to read our post. We hope we’ve given you some ideas about how to make a budget, stick to it and save money while studying. Best of luck with your finances and your course! And don’t forget to ask for help if you need it.