Bills, budgeting & banking: a student’s guide to money management
Moving away from home can be challenging in many ways, especially when it comes to managing your own money. Between rent, groceries, and the occasional late-night pizza, there’s rarely any respite for the average student’s bank account.
In our recent survey of essential life skills for students, money management was repeatedly noted as one of the main skills parents try to teach their teens before they head to university.
But, despite its perceived importance, the data also shows that many students still lack basic financial skills.
So, what’s the secret to money management? In this guide, we’ll take you through the fundamentals of bills, budgeting, and banking so that you never have to worry about those awkward “can-I-borrow-a-tenner" conversations again...
Banking: student accounts and savings
Banking is a vital part of money management that can be daunting when you first arrive at university. In fact, less than a quarter (23%) of students in our survey are taught how to set up a direct debit ahead of their first term.
Before you can step into the thrilling world of direct debits, you’ll need your own bank account. If you haven’t already set this up, you may want to consider a special ‘student’ account, which offers a selection of benefits specifically tailored to cash-strapped students.
One of the best student perks available is a large, interest-free overdraft, which will give you some extra breathing space in the run-up to your next student loan payment. It may just save you from the mortification of having your card decline on a night out.
Top tip: Budgeting is the best way to keep yourself out of your overdraft and away from unnecessary debt. Always speak with your university’s student advice service if you are struggling with money.
Beyond that, many banks will throw in a free Railcard for big discounts on train tickets, or other promotions like money off at restaurants and cinemas, so it’s worth shopping around to find the best deal.
If you find yourself in the privileged position of having more money than you need, you may want to consider opening an easy-access savings account, where you can earn interest on the excess. With an easy-access account, you can withdraw money as and when you need it.
Bills: getting set up and sharing costs
There’s nothing worse than seeing your student loan finally land in your account, only for it to go straight on bills. Despite the disheartening regularity of these expenses, our survey found that just 37% of students are taught how to pay a bill before they leave home.
Luckily, the process of paying a bill is pretty straightforward – you just need to check the payment details are correct, choose a method to pay, and make sure funds are sent on time each month. So that you never miss a payment, it’s often best to set up a direct debit.
So, what exactly do we mean when we talk about bills? Here’s a comprehensive list of the different expenses you may be dealing with as a student:
- Rent: Typically, rent is the main expense for students. It’s often due monthly or quarterly, depending on your accommodation.
- Energy: Often included in rent (as in our Yugo spaces!), but not always the case.
- Water: As with energy, water costs are sometimes included in rent.
- Wi-Fi: Another cost that may be covered by rent, though not as common as with utilities.
- Phone: Central to your social life, but also keeping up with emails on the go.
- TV license: Needed if you plan on watching live TV or using BBC iPlayer.
- Subscriptions: Spotify, Netflix, and other over services.
- Council tax: You won’t have to worry about this if you’re a full-time student – just make sure to notify your local council so you don’t get charged!
That might seem like a daunting list, but fear not, as there are a few tactics you can use to stay on top of your bills. If you’re living with roommates, consider setting up a group on a bill-sharing app like Splitwise to ensure everyone pays their fair share. Some banking apps like Monzo will also allow you to split bills between groups.
You can even set up a separate bank account for bills, or use money pots on your banking app to set aside the money. The golden rule is to ring-fence whatever you need for bills from your monthly income before factoring in other optional expenses, which brings us onto our next topic...
Budgeting: top tips for managing your money
It sounds about as fun as a 9am lecture, but budgeting is probably the most important aspect of money management for students. And yet, most students – 64% in fact – come to university without ever being taught how to create a budget, and stick to it.
So, where do you start? You don’t necessarily need to track every single penny you spend, but having a rough idea of your income and expenses will go a long way. Here’s an easy three-step process you can follow to get started:
- Tot up your regular income: Student loan payments and grants, as well as any income from part-time work or parental support.
- Deduct your fixed costs: The total sum of rent, utility bills, and the other fixed expenses we’ve already covered above!
- Work with what’s left: This is your remaining pot of money to cover savings and day-to-day costs like groceries and going out.
If you want to take your budgeting to the next level, you can set limits on what you spend. The 50/30/20 rule – where you allocate 50% of your money on needs, 30% on wants, and 20% on savings – is popular, though something like 60/35/5 might be more realistic!
Apps like Monzo and Starling can help you track your spending. And remember, budgeting doesn’t mean not having fun; it's about knowing how much fun you can afford to have!
Bonus tips for saving money as a student
By now, you’re well on your way to mastering the basics of money management – but what about some handy tips to make those pounds stretch even further? Here are ten simple ways to save money as you go about your student life:
- Take advantage of student discounts: UniDays, Student Beans, TOTUM, VoucherCodes – the list is virtually endless, and you can use these pretty much anywhere!
- Get familiar with batch cooking: When you can muster up the energy to cook, do so in batches and whack the leftovers in the fridge or freezer. Larger batches mean less waste and cheaper food shops overall.
- Learn to shop second-hand: Whether it’s clothes, textbooks, or furniture, buying pre-loved items online or at charity shops is the way to go to secure the best deals.
- Pick up a Railcard: Even if you can’t get one through your bank, a 16-25 Railcard is probably still a worthwhile investment if you plan to use the train regularly.
- Share costs with flatmates: Apps like Splitwise are great for tracking shared costs and ensuring everyone pays equally.
- Consider a side hustle: From tutoring and freelancing to a retail job on weekends, there are plenty of ways to earn money as a student.
- Shop around on comparison sites: If you’re looking after your own bills, use comparison sites like Uswitch to get better deals on energy and broadband.
- Find free things to do: From free museums to campus activities, there’s tons of fun to be had without spending a penny.
- Hit up the reduced section: There’s nothing like finding a yellow sticker bargain in the reduced section of your local supermarket.
- Sell unwanted clutter: Clothes, books, tech – if it’s in decent enough condition, you’ll likely be able to sell it on sites like eBay and Vinted.
Money management: an essential life skill for students
Ok, you might not be building generational wealth after reading this guide, but you should at least be able to survive until your next loan payment – and who knows, potentially begin building those savings for when you graduate.
Ultimately, money management as a student is about being careful with your money but still enjoying your university experience. With a little planning, you can have those memorable nights out and still have food in the fridge for the next day!
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