There’s plenty to be excited about if you’re heading off to university. But you should take the money side of things seriously and think about the cost of living for students. A bit of forward planning should help you better manage your finances and get the best out of university life.
Create a student budget
Student finances are notoriously tight and the UK isn’t a cheap country. Not to mention that we’ve been going through one of the worst bouts of inflation in living memory. That’s why it’s vital to create a student budget – the last thing you want is to run out of money.
You should start thinking about your student outgoings and income well before you get to university. What will be your total average weekly spend as a student and how much will you have coming in?
It’s worth using an online student budget calculator or student budget planner to help you create a budget.
Here's how you work it out.
Make a list of your outgoings
The first step is to make a list of all your outgoings as a student so you can get an idea of how much you’ll spend at university.
Here are some typical costs to include in your student budget:
- Tuition fees
- Accommodation costs
- Gas, electricity and water bills
- Home contents insurance
- Mobile phone
- Car insurance
- Entertainment (including drinking and eating out)
What's coming in
Equally important when it comes to creating a budget is to get a good idea of your income and funding. Your list will always be shorter than the list of outgoings, but there are various potential sources of cash for students:
Managing student loan
If you’re going to university, you can apply for a student loan to cover fees and living costs. The amount borrowed to cover fees goes directly to the university rather than into your bank account. Loans to help with living costs are means-tested – how much you can get generally depends on how much your parents earn. Students from lower-income backgrounds can borrow more.
Grants, bursaries and sponsorship
The government provides specific funding for those studying:
- Social work
It separately offers grants for the disabled and people with dependent children or adults. There are also various charities and trusts with funding for students. Another option is to apply for a degree apprenticeship with a company – you’d get a salary as an employee, doing your course as off-the-job training during working hours, with your tuition fees paid as well.
Cash from parents
This all depends on individual family circumstances. But if you’re expecting maintenance payments from your parents while at university, it’s best to agree how much they’ll pay into your bank account each month or week well before your course starts.
Part-time jobs to help with living costs
A lot of students do part-time jobs to help with living costs. If you’re thinking about doing part-time work, it’s worth researching the area where you plan to study ahead of time to see what sort of part-time jobs are available and how much they pay.
Savings you’ve built up
Take a look at any ISAs/savings accounts you have and decide how much of your savings you’re willing to spend during your time at university.
How to manage outgoings as a student
Having worked out what you’ll have coming in and leaving your bank account over the course of the year, you can then estimate what your weekly budget as a student will be.
Here are some top tips for managing outgoings as a student:
Stick to your budget
You wouldn’t want to run out of money halfway through the year or suddenly find you can’t afford to spend anything on entertainment and going out with your friends. So once you’ve worked out your average weekly budget, stick to it. Saying that, you might want to set your budget to assume a little more spending than usual at certain points. Students tend to spend about 70% more on average during Freshers' Week when they’re traditionally socialising a bit more than usual.
Use more than one account
Spreading your money between bank accounts could help you avoid overspending. It’s all too easy to wreck your budget if money is just sitting in one place, so having some money in an account you don’t have ATM access to is a good idea. You could then set up regular direct debits to transfer funds to your everyday student bank account so there’s enough there to meet your weekly budget.
Pay essentials first
Make sure you pay for all the essential things before you splash out on entertainment. You’ll always want there to be enough money in your account to pay for groceries after things like rent and utility bills have been paid. Remember all the direct debits you’ve set up too, which may come out at different times during the month.
Keep track of your spending
You need to regularly check how much you’re actually spending to make sure you’re budget is on track. If you’re going over, you can then figure out why and take some action before your spending starts to jeopardise the whole year’s budget. Many banking apps let you set up alerts for when your bank balance falls below a certain level.
Look for student discounts
Student discounts are widely available, including in entertainment venues like:
You should also look at the offers that come with student bank accounts – they often come with a travelcard or supermarket gift card, for example. Student discounts are available online and in person, so always carry your student ID with you to avoid missing out.
If you’re at university and you’re worried about your finances, get advice. A small minority of students actually give up their studies each year due to money issues, so you’re not alone. Your university’s finance department should be able to point you in the right direction to access things like hardship funds or emergency loans.
What happens to student loan when you graduate?
If you’re a full-time student doing a bachelor's degree, you might need to start repaying your loan the April after you graduate. The good news is you don’t have to start repayments unless you’re income is above a certain level.
You only need to make loan repayments if your pre-tax income is above the repayment threshold of £27,295 a year, or £2,274 a month. You must repay the loan with 9% of your income above the threshold – what you pay is automatically recalculated when your income rises and falls.
If you’ve started to repay the loan and your income falls below the threshold, repayments stop until your income goes back above the threshold again.
Make sure your insurance covers you
You can get student contents insurance to cover your belongings while you’re living away from home at university.
But always check if your parents’ existing home insurance policy will cover your belongings. Certain home insurance policies do include student contents insurance for family members.
Student contents insurance covers your belongings against loss, damage or theft. It means things like your laptop, phone, clothes and sporting equipment will be covered if there’s a fire, flood or break-in. You typically get up to £5,000 of cover on student contents insurance, which is more than enough to replace the belongings for most students.
If you own a car, you can also get a student car insurance policy. Student car insurance does tend to be fairly expensive as students are viewed as a risky group to insure on the road, especially as they tend to be young, inexperienced drivers.
How to get cheap student insurance
Comparing the market can help you get the best deal on student insurance. You can use our site to compare quotes on student contents insurance and student car insurance to help find the best deals for you.