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Budgeting

By TheStudentGuide
Budgeting

Your finances can be a tricky thing to handle at university, because quite frankly you are very busy having fun, getting an education and making friends to be worrying about your bank account. We know that budgeting is boring! We know it is way more fun to spend money than to think about saving it, so quite frankly we are impressed that you’re even bothering to read this article. But if you don’t budget, and instead blow all your money then you will be in the s**t. There is a joke that students just eat pot noodles and baked beans. But that could be you. Read on to make sure it isn’t!

Direct Gov – The maximum Maintenance Loan available for students starting their course in 2011/12 is:
£3,838 if you’re living in your family home
£4,950 if you’re living away from home and studying outside London
£6,928 if you’re living away from home and studying in London

Your Maintenance Loan

In October, most of you will have the first instalment of a total yearly maintenance loan of anywhere between £3000 to nearly £7000 drop into your bank account. The amount you receive depends on a combination of factors, including where in the country you’re studying, your family’s income and if you are living at home or not.

You’re now officially loaded and there is a massive temptation to spend it on having fun! Why shouldn’t you go on a weekend trip to Paris and drink champagne on the Eiffel Tower, buy an elephant and get that full leg tattoo you’ve wanted for years now?

Unfortunately you can’t because your total loan has to last for the whole academic year (at least). This means that you have to budget. To find out your budget, you must divide the amount of money you have by the amount of time it has to last. If you do blow all of your cash early on then you’ll end up being very, very poor and unable to have much fun for the remaining time.. This involves a little bit of Maths, as shown below.

  1. Divide the total loan amount by the amount of months you are at uni
  2. Subtract your monthly rent
  3. Subtract the amount you’ll spend on food and travel each month

= This will leave you with an amount to spend as you wish

For example:

  • The average student receives a maintenance loan of around £4000 (or less).
  • Divide that by 9months, which equals £444 a month.
  • “That’s still loads,” we hear you say!
  • But unfortunately you have a lot of boring expenses to cover with this amount.
  • This includes your rent and bills, which will be approximately £300 a month. 
  • You are now left with £144 a month.
  • Food will cost at least £40 a month and travel (taxis home at 4am!) around £20.
  • So actually that is another 60 quid worth of expenses on top of your rent.
  • This leaves you with £84, which now means you have around £18.90 a week and £2.70 A DAY.
  • Don’t spend it all at once rich boy.

£2.70 doesn’t even cover two drinks in the student bar (we know that’s what you’re thinking) and in case you forgot, that £2.70 is also for EVERYTHING else. Whether that be kebabs, shoes, beer, tickets for nights out, haircuts, jeans etc.

Sorry to be so depressing – this isn’t a fun article but we think it is important for you to see the hard facts. Hopefully you’ll take that elephant back to the pet shop now and cancel your Paris trip.

Warning

If you can’t afford to live you may a) feel really stressed and b) resort to credit cards. This leads to unhappiness and bad debt. Credit cards are EVIL. They are never ever your friend.

This is because with credit cards you have to make repayments by a certain date. It isn’t like paying your dad back! If you don’t pay it back then you’ll get charged and also build up interest charges as well.

This can also lead to having a bad credit rating, which will hinder you in later life when you want to do even more boring financial things like get a mortgage.

Fees

Starting university this year was a very good call because you sneaked in as the last academic group to pay around £3000 fees annually, whereas next year in 2012 prices will be hiked up to £9000 a year at many universities. Literally your degree is a third of the price.

You cannot control the debt of around £10,000 which you’ve paid for your fees. You’ll pay it back gradually when you have a job after graduation. Instalments will come out of your wages which you will hardly even notice. Think of it as a graduate task rather than nasty debt. It is a sensible debt because it is an investment in your future.

You shouldn’t worry about it, because this is actually the best loan you’ll ever get, in terms of paying it back without crazy interest rates.  The bit you can control is your spending of your Maintenance loan! Read on for the Dos and Don’ts  and Money Saving Tips in the next few pages to help you keep control of your spending.

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