University is essentially a training ground for becoming a fully-fledged adult and you’re bound to make plenty of mistakes along the way – but when it comes to your finances, some oversights can be more expensive than others.
Every new student is going to find themselves in a sticky budgeting situation at least once during their university years, but by understanding these common mistakes, you can at least try and save yourself from living off pot noodles for an entire month when you’re strapped for cash.
Remember your overdraft is not your money
Many student bank accounts offer an interest-free overdraft, which essentially allows you to continue spending on your current account with borrowed money from the bank until you next get paid. It will then automatically deduct what you owe when money enters your account.
It’s easy to see this as free money, but this can really catch you out after graduation. Even though this is three or more years away from now, the day will come when the bank starts charging you interest on your overdraft.
If you don’t bear this in mind, you could end up with thousands in debt and not enough time to pay it back to the bank before they start to charge.
To avoid this, you can arrange with your bank to have no overdraft in place. This means if you run out of money, payments will bounce rather than putting you in debt. But if you really need some extra cash, you might choose to have a small overdraft in place. At the end of the day, you gotta eat!
If you go into your overdraft, sit down with a pen and paper and work out how long it will take to repay; when is your next income coming in? How much will it take from your next deposit? When will you be back in the black?
These considerations can prevent you from mindlessly racking up tonnes of debt in the course of your degree.
Never take your debit/credit card on nights out with you
‘Phone, keys, ID and bank card’ is the usual checklist before you hit the town, but if you don’t want to spend a small fortune on every night out, it’s a good idea to swap that card for a set amount of cash.
By taking your card out, you risk spending your entire week’s grocery money when that ‘Friyay’ feeling strikes.
Your bank card can be a useful security net on nights out – you will always be able to afford a taxi home or settle those late night hunger pangs, but if you plan in advance, you can ensure you have enough cash to last the night.
While this may mean you get to a point when you can’t afford another drink, this will be a blessing when you check your balance the next day!
Find social activities and hobbies that don’t cost money
When you arrive at university, making friends is a priority. This usually means lots of nights in the bar, lunches in Cafés and taxis around town. Of course, making friends is great, but socialising can quickly become expensive.
Before you know it, you might have loads of friends but no money to do anything with them. Birthdays have to be missed, group day trips are forgone and eating in a restaurant seems like a pipedream.
All this can be avoided, however, if you get creative with your socialising and find non-expensive or even free activities to do together. Does someone in the group have a cosy living room you can hang out in? Or is there a nice park near campus to make your new meeting spot?
If it’s activities you’re looking for, your university or Students’ Union should have societies that offer classes and events for little or no cost. Learning how to rock climb, make pottery or simply exploring the city are great ways to socialise without spending loads of cash, and you’ll likely make new friends along the way.
It can be tempting to throw caution to the wind and unapologetically splash the cash, and this is likely the first time you’ve been away from home with your own money to spend. But does reckless spending in return for weeks of bankruptcy and boring nights in really sound better than a few reasonable changes to your spending patterns?
Sometimes you need to make your own mistakes to learn from them, and chances are you’ll find yourself in a financial pickle at least once in your first year. If this happens, don’t panic – it’s a rite of passage to becoming an adult and almost every student makes financial mistakes to start with.
Remember your university is there to help you, and can often lend a helping hand if you really struggle. There might be a financial advice centre at your university who can help you draw up a budget, and you can speak to your academic tutor if money worries are affecting your studies.
The main thing to remember is that mistakes are opportunities to learn and grow; no one gets it perfect the first, sometimes second or even third time. No matter what happens, you’re not alone and there is always someone you can speak to.
If you have any questions about student finance or budgeting, send them to firstname.lastname@example.org and we’ll do our best to help.