In risk of sounding like your mother, it’s time to talk money. Money does not grow on trees and everything your parents said about “keeping an eye on your money” was all unfortunately true. Budgeting is something let’s face it; none of us want to do. It is not fun but it is essential for you to leave university with minimum debt.
According to a report from Natwest Bank (www.natwest.co.uk), the average student will spend £33,512 completing a 3 year degree course. Last year this amount was £28,600 so a steady increase is happening. By taking into account any money students receive from parents, student finance (maintenance grants etc) and any income from part-time work you can expect to graduate with an average of £14,779 debt.
The National Union of Students (NUS) estimated that the average student last year would have spent £1777 on course related costs such as fees and materials. As well as another £7033 on living expenses including rent and those oh so essential nights out! This makes a total of £8810 which has to come from somewhere and I am sure you have noticed that your student loan isn’t quite this amount!
Barclays Bank (www.barclays.co.uk) offers a free online budgeting calculator to anyone who wants to make use of it. This useful tool allows students to enter their estimated expenditure/income, then goes on to show them the shortfall. It is free, so use it!
One of the best ways to budget is to look at what money has to go out, this includes rent, bills, tuition fees and food (the essentials!). Then look at what is left; now I warn you this is not a pretty sight. Divide the amount you have remaining after essentials have been taken out by the weeks left in your semester e.g. £200 left over divided between the 15 weeks in first semester – 200 divided by 15 = £13.33 (or until your next portion of your loan comes through) and that is what you have to spend per week.
Now remember if your weekly allowance is something like £10, you are not expected to socialise and buy books on this budget. This is where those overdrafts that our banks so willingly gave us come in to play.
Overdrafts
Barclays offer up to a £1000 interest free overdraft for students in their first year. Natwest offer their customers a £1250 interest free overdraft also in the first year. Both of these banks increase the allowed overdraft depending on the year in study and at the customers’ request. HSBC offer an interest free overdraft of up to £1000 in the first year, as does Lloyds TSB.
Another important thing to remember while spending your overdraft is that although your bank isn’t charging you any interest for the time being, when you finish your course they will! So before joining a student account and being whisked away by those “amazing” freebie deals they are offering you, make sure you check what the overdraft rate will be once your course finishes.
Also it is wise to remember that if you wish to increase your overdraft limit, you should increase it with your bank officially, by going in to your local branch. If you just carry on spending you can be hit with penalty fees plus interest on the unauthorised overdraft amount.
Real Experience
Jennifer Usher a 2nd year student at the University of Lincoln was unaware how much she was actually spending a week. Having sat down and worked out what her expenditure on an average week was she has decided to make some changes. Her average weekly budget was £65 a week including her rent.
Jenn however was paying (per week) £57 on rent, £30 on food, £40 on nights out and socialising, £10 on her mobile phone and around £15 on luxuries such as new clothing, DVDs and music. This expenditure totalled £2280 a semester (based on a 15 week semester) Leaving her with a shortfall of £1305 per semester and a grand loss of £2610 per year of study. This amount does not include any course related expenditure such as printing or tuition fees.
New Student’s Fears
The Natwest survey also found that 71% of students surveyed who were going in to university for their first year were concerned about whether they could afford it. This is shocking when compared to the fact that only 60% were worried about failing essential exams.
The survey also found that 87% of 1st year students intended on looking and getting a part-time job to help subsidise their lifestyle. Just to even up the score, the survey also found that over half of current (2nd/3rd year) students had considered dropping out of university and seeking full time work to pay of debt they had already totalled.
One student who was struggling to pay his way through university was Simon Dance, a 3rd year from Northumbria University. In order to help his financial situation and reduce the amount of students who found themselves in his position, he launched the website www.clearstudentdebt.co.uk the site offers features on eating on a budget, overdraft facts as well as ideas on how to budget successfully.
He took the time to investigate and gather information from a variety of banks, building societies and student finance companies. Then Simon went about putting the information in a user friendly way on his website for other students to use.
Part-Time Work
A report published by the Trades Union Congress (TUC) and the National Union of Students (NUS) in early September has found some shocking statistics regarding students and part-time work. It found that in the past 10 years the amount of full-time degree level students working in a part-time job have risen by 54% It was an estimated 406,880 in 1996 and now the number is at 630,718.
The average student was found to be working on average 14 hours a week, but the report also found that 40% of working students felt their jobs affected the course. Problems included not having enough spare time outside of work and seminars/lectures to research and read up for essays and exams.
The report called All Work and Low Pay found that 40% of students found work in retail and 21% found it in bars and clubs.
However the good news to new students is that a similar survey from the Department for Education and Skills (DFES) has found current students are spending 15% less on alcohol and entertainment than they were 6 years ago.
Freebies and Essentials
Make sure you go along to the fresher fair, it is there for you! Local business will offer your free things and entry in to prize draws as well as money off coupons as an incentive for you to come to their store or bar/club. Just be wary of signing up for anything you aren’t really interested in or don’t know what your signing up for.
Also one last piece of advice, if you have a TV in your bedroom make sure you get a license. If you pay quarterly you are able to claim a refund back for the summer holidays if you are not using it. However there must be a full 3 months still valid on your license in order to do this.
But most important of all… have fun and enjoy yourselves. Yes there will be some tough times, but take if from someone who knows your about to have the time of your life. Good luck!
© Emma-Jane Williams
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