Managing your bank account - tips on managing student funds
If you're a student, you'll already know how difficult managing your finances can be (and if you're a soon-to-be student, you'll soon find out!). For most people, becoming a student will be the first time in your life that you've had to deal with substantial sums of money on your own, and that can be daunting.
Your bank account will be central to managing your finances during your time as a student. This will be the place that you receive your student loans and the place from which you pay your fees, as well as all your other costs.
How to manage your finances as a student
A major part of keeping your finances healthy as a student is your budget. When you're trying to make do with relatively little money, it's important that you know how much you need to put aside for all your essential costs and how much you can afford to spend on other things.
Most students will have to run their budget on a term-by-term basis, because that's how student loans are paid into your account and (usually) how you'll pay your tuition fees and possibly your rent.
Student budgeting - step by step
1. Start by noting down how much you receive into your account per term, including any other income (e.g. contributions from parents or expected income from part-time jobs). If you're not sure how much your loan is, your student loan statement should tell you.
2. Next, note down any outgoings that you pay just once a term (like tuition fees and rent). Also consider putting some money aside here for things like text books and other stuff you'll need for your studies. Now add up the total.
Subtract the total from your income for that term. We'll call the remaining money your available funds.
3. Now divide your available funds by the number of weeks in the term. For example, if you have £800 of available funds for a 10-week term, you'll have £80 a week to spend.
4. Next, add up your typical weekly outgoings. As a simple example, you might put aside £30 for your weekly food shop, £5 for laundry fees and £15 for travel, coming to a total of £50.
5. Now subtract your weekly outgoings from your weekly available income. In this example, £80 minus £50 = £30 spending money. This money can be spent as you wish (e.g. on socialising), although it's a good idea to put some aside every week for emergencies.
Still not sure?
There are things you can do to make budgeting easier. One idea is to set up a separate instant-access savings account to keep all your money until it's needed. Each week, transfer your money for that week into your main bank account (so in the example above you'd transfer £80 across every week).
This can make overspending less likely, but be careful about going overdrawn unless you have an authorised overdraft facility in place. Many student bank accounts offer an interest-free overdraft facility, so it may be worth choosing one of these accounts - but be aware that your overdraft could grow a lot faster than you expected if you start using it.
If you find budgeting difficult, there are some UK bank accounts that actually provide a budgeting service, such as the Think Banking current account, which helps you live within your means by making sure your essential bills get paid on time.