Your Finances

Whilst the majority of students leave having acquired large debts others leave with only limited amounts of debts. The amount of debt that you have accumulated once you have left University is dependent on how well you are able to manage your money whilst studying and the lifestyle that you choose to lead. By planning your income and controlling your expenses, not only will you be able to minimise the debt you have after University but also avoid running out of money suddenly whilst studying.

It is estimated that the average living costs of a student whilst at University is equal to approximately £5,000 a year. Excluding the , this figure includes living expenses, rent, food, books, travel, and socialising. It is only where this full amount is provided that a student may be able to leave University without debt. However, these high costs for studying do mean that the majority of students leave University owing money. Research into student debt has shown that the average student leaves University owing in excess of £7,000.

Considering the university life-span, it can be guessed that students with an average 3-year full-time course, where the student is living in rented accommodation that the total funding required would be £18,000 including the £3,000 required for tuition fees. It is easy to see that the maximum entitlement for most student loans over a 3 year period will not cover these costs and additional sources of funding will be required.

Even when considering additional means such as , , parental contributions, part-time jobs, or savings it is apparent that a student will need to budget to ensure that they have enough to support themselves throughout this period.

Taking this into account although there are a number of items such as , and rent that cannot be controlled and managed, many other items can be managed more effectively to ensure that the debt accumulated is as small as possible. It is because if this that students need to understand how to manage their money effectively. In addition, it is fair to state that this is particularly important for students in their final year, who have a lower loan entitlement coupled with the reduced time that they have available for part-time jobs.

Managing your money termed as 'budgeting' is about balancing the amount that you have available (your income) with the amount that you will spend (your expenditure). By creating budget plans, you are able to understand your finances better, which will help you make better decisions when making financial decisions.

Planning on how to manage your money should ideally begin a few months before you start university. However, if you are already at you should begin this process as soon as possible, because the sooner you begin, the more comfortable you can be managing your finances.

If you have not previously lived away from home or are unsure about creating a budget, your bank manager or the will be able to help.

When drawing up a plan, the first thing you need to do is identify what periodic intervals you will use to calculate your cash flow. For most students, it is beneficial if you use a weekly or fortnightly time span.

The second thing to do is understand how much money you will have available to you before you start the course, and whilst you are studying. Having obtained this information ensuring that you have taken into account all sources of funding available such as and parental contributions. However, only list money you are certain you will receive.

Check: Ensure you include everything such as part-time wages, birthday money, etc.

Fundamentaly, this section will be based on estimations as it is unlikely that you will know exactly how much you will need to spend if you have never lived away from home. These expenses include costs such as food, entertainment, travel, clothing etc. Make sure you consider any bills that may be monthly or quarterly and average these into periodic intervals. This section is extremely important as you have to ensure that you have taken into account all possible bills so that the budgets that you set for yourself are as realistic as possible.

Once both of these amounts have been obtained you need to deduct your expenditure from your income to identify your cashflow. This exercise will help you estimate how rapidly your income can disappear. It is only once you have obtained these figures, that you can start thinking about planning your finances realistically. You can use the Calculator to assist you.

You may find that once you have completed this exercise that you have some money left over or alternatively you may have a shortfall.

If you do have a shortfall, this means that you will have to find a way to increase your income or decrease your outgoing money. Managing your money having drawn a plan is based on two key principles, these are maximising your income and controlling your spending. Some ways in which you can tackle both of these issues are explained below.

Summer Work - It is recommended that in the summer holidays where students have approximately 6 weeks leave from their course, that they earn as much as possible to assist in the coming academic year.

Rent - Although rent will be quite a rigid expense for most students, it is important that students do not commit themselves to excessively high rent wherever possible. Consider sharing with other students if you do not wish to stay at home with your parents.

Going Out - When most students, go out socialising, they will not only take with them the cash that they have available but also their bank and . This is an increased temptation to spend more than you may be able to afford. Therefore, when going out ensure that you only take cash with you that you know you will need and can afford.

Books - Instead of buying all the books recommended to you on your course, consider either using the library resources, buying second-hand or sharing books between a group of friends so that everyone can save some money on books.

The basic rules for using your budget plan are:

• Stick to the amount that you have planned in your budget
• Do not overextend your spending in a particular week on the basis that you will spend less or make up the difference at a later time. This makes it extremely difficult to manage your money effectively.
• Keep all paperwork relating to your finances as you might find them useful at a later date. These items can include receipts, , etc.
• Allow some flexibility in your plan in case of any unexpected costs.
• Review the plan on a regular basis because your financial situation can change quite rapidly whilst you are studying.

The benefits that you will see by creating a budget for yourself include:

• Being able to plan and set aside money for unexpected costs or luxuries such as holidays or spending sprees.
• The ability to keep track of your outgoings and make adjustments as necessary to ensure that you have enough money to last you until the next semester or term.
• If you need to see your bank manager regarding an increase to your overdraft limit, or credit card, you will be able to show that you plan your finances carefully.
• Budget keeping will be an important part of your working life, as you balance your salary against the purchases that you make. By starting to keep a budget now, you will be able to better manage your finances later.

Managing your money effectively takes time to learn. Advice can be found from various sources including friends, family, your student advisor and of course, your bank manager.