How to avoid the unexpected costs of university living
Adulthood beckons...get ready for the next chapter in your life with our comprehensive guide
1. So…you’re going to university!
British convention dictates that 18-year-olds gain some ‘life experience’ in the wider-world before embarking on a career. For approximately 47% of us, that’s at least three bohemian, enlightening and enriching years at university. It’s grubby, gritty and expensive, but nonetheless, you emerge with a degree and hit the market as a talented graduate with bags of energy and enthusiasm.
But, we’re getting ahead of ourselves. You’re not there yet!
You may have some money management knowledge and personal finance lessons are now mandatory in UK schools (as of 2014) for 11-16-year-olds, but if you missed out, managing money — however tedious it may sound — is the first big challenge you’ll encounter at university.
In this guide, we’ll show you how to spend wisely and live well. But let’s get one thing clear; you shouldn’t save at the expense of your education, and definitely not to the detriment of your social life.
Every choice you make about money should be tactical, well-researched and part of a wider plan so you boss every experience. We’ll help you train your ‘personal finance brain’ ahead of university, so you can shop guilt-free and live a lovely life away from home.
2. From freshers’ week to graduation – a guide to personal finance
How can you possibly create a healthy and livable student budget when you don’t know how much money is in the pot? Let’s start at the very beginning.
If you’re not sure what you’re eligible for, or what your budget is likely to look like, Brightside has a student budget calculator to help you get started, but here’s a workable example:
If you’ve recently said ‘farewell’ to a part-time job, where you worked 14-hours a week for the under 18’s minimum wage, you earned approximately £2,600.64* each year. If you live with your parents and don’t pay any bills, you’ve probably got around £200 a month to indulge in clothes, a phone, nights out, coffees, and cars. Whatever you want, really. But that hard-earned income is about to expire and be replaced with loans.
To help with your living costs, Student Finance supports undergraduates whilst at uni with a maintenance loan. If you attend university in England (it increases in London), your loan is £8,200 for 2016/7, and paid directly into your bank account each term. At the start of spring, summer and autumn terms you’ll have £2,733 to work with.
[*14 hours a week, minimum wage for under 18s £3.87 = £54.18 a week, £216.72 a month and £2600,64 a year]
In year one, you’ll receive your first maintenance loan, and you might need to use some of it to cover the cost of your halls of residence. Halls can set you back approximately £1,700 per term, leaving you with around £1,000 to spread over a 12-week term. That’s just over £83 a week in your pocket, after accommodation fees are paid. That’s £30 a week more than you’d normally get from a part-time job.
You should investigate student funding, bursaries and scholarships because they aren’t automatically awarded to those entitled to the extra help. And, don’t forget to set up a 0% overdraft on your student bank account. It’s a lifeline for extending a tight budget or simply to have as a safety net. The overdraft adds approximately £1,000 to your yearly budget (but it can be less, if you prefer). Remember there will be a set time limit to pay it back, so read the small print before you sign on the dotted line and open all the letters the bank send you, just in case!
The first year of university is your chance to meet new people, join societies, sports clubs and creative groups. Jolly holidays and field trips are the perfect opportunity to find your new friendship group, as well as expand your horizons and learning.
Glynn, a second year degree student, says there’s a pressure to chose wisely:
And remember, while that skiing trip or club looks incredible, if the cost means you’re eating beans for the next eight weeks of term, it’s going to be pretty depressing in the long run. Keep your club and trip choices discerning and ask the important questions: ‘Who?’, ‘What?’, ‘Where?’ ‘When?’ and ‘Why?’ to logically weigh-up the benefits. Always think about how it will look on your CV too. There’s usually a cooling off period after you sign up, so if you have second thoughts, get in touch with the organisers to call off your membership.
The maintenance loan could also be required to cover rented home costs, including agency fees and deposits which can be around £250 per person if not more. Be aware that while university owned halls will bundle in water, gas, electricity and broadband as part of the rent, a private student home will not.
In year two, you’re out of halls and into a shared house. Get contents insurance, pronto, says undergrad Laura:
Unfortunately Laura’s case is not isolated and burglary is a crime you need to safeguard against. Check this league table to see how your university or region fares, invest in contents insurance, keep valuables out of sight and windows closed and locked when you’re out of the room or house. It’ll save you money and heartache in the long run!
The other costs, such as broadband, heating and electricity will be split with other residents, so set up a joint bank account with at least two named account holders, and agree a fixed amount to transfer in every month. If one person wants to take responsibility take heed from graduate, Owen:
With a shared bank account, everyone has transparency and feels duty bound to keep up with payments.
For any contracts you set up, read the small print, take meter readings and negotiate with providers. You’ll find there are offers, cashback and easy savings to be made.
If your housemates are on different courses, it’s likely your time on campus will slightly differ. Learning sometimes becomes more independent in year three, and students have more time to study, stay at home or even get a part-time job.
If you do get a part-time job while studying, keep all your P45, P60 forms and payslips close to hand.
As Lucy from Falmouth University warns, it’s possible for HMRC to take you by surprise and land you with an eye-watering bill, even though you may not have worked since 6th form or college:
If independent study is the focus in year three, your housemates may choose to spend more time at their family home to study, meaning the university house is much quieter. And as much as you love your housemates, there’s a chance they may try to shirk their financial responsibilities if they aren’t using utilities to the degree that you are.
Although it’s pessimistic, it’s best to be prepared for sneaky bill abandoners. Hold a house meeting at the start of the year so you can talk about schedules over the next 12 months – there’s no need to point fingers if someone is going to be away, but an honest conversation will save your precious pennies and friendships in the long run.
Take the stance that it’s an opportunity to renegotiate with your energy providers, as fewer people running baths and cooking dinner means lower energy usage.
If you have a joint bank account you should redistribute any remaining funds to all contributing housemates, but don’t get too eager. Wait until all bills are paid off and be patient, it can take a number of months to close everything off entirely – particularly if you pay bills quarterly – after you leave the house.
Finally, do everything within your power to reclaim the house deposit to give your bank balance a little boost as you job hunt through the summer.
3. Identifying Unexpected Costs
At worst, your budget could be £1,000 for 12 weeks, that’s £83 a week. Strategic spending can drive your cash through to week 12, with hopefully leave a few coppers left over.
Robert Fowler, Co-ordinator at Student Money Advice and Rights team at the University of Derby suggests that before starting university, undergraduates should ‘have a very basic understanding of what funds are coming in and going out’ but should also be able to anticipate unexpected costs which will make you more than capable to handle tricky financial situations.
Where might you wrestle with unwelcome bills? Robert suggests you put these key spending categories on your radar:
- Toiletries and laundry
- Clothes and footwear
- Travel (both to and from university and travel home)
- Textbooks, art supplies and course resources
- Furnishings (bedding) and items for your house / room / kitchen etc
- Leisure / social life / eating out
- Contents insurance
You could anticipate that you will need to make a few ‘unexpected’ purchases from these categories over 12 weeks. What if you lost your phone? What if you have a home emergency and have to travel back more often? Tackling all of these ‘what ifs’ in one go will paralyze frivolous spending ensuring you have enough to see you through.
Create A Term-Long Calendar
Before leaving home for any term of university, set up a specific 12-week calendar to collate key dates for essay and projects deadlines, family and friend’s birthdays, plus your own personal events such as field trips, society balls and visiting friends. The calendar will clearly highlight when you’re busy and make it obvious where costs will spiral. You need to allocate more than your £83 budget to these weeks.
For example, you can hold back a few pounds every week and grow a small textbook fund, for the essay due in week six (because you never know what a lecturer might spring on you!).
The calendar also prompts you to pack with fool-proof precision. For example, if art students have a painting module, they’ll bring their equipment from home rather than buying it all again in week five. If there’s a networking day penciled in for week seven, pack your smartest togs rather than splash out on finery in a panic.