First published 20/08/2013
Preparing your child for university life
Written by Laura Staples
Deputy Editor of Moneywise magazine
As the light starts to fade and the leaves turn to gold, gone are the sleepless nights you endured supporting your child through their A-levels and university applications. Now as a new phase begins, the time is approaching for you to pack up the car and get them settled into their new halls of residence. Going off to university is one of life's exciting turning points - for parent and child alike. It comes with a long list of things for you and your child to plan for - and top of the list is arranging their student finances.
How it all adds up
First things first, help your child set themselves a budget. A 2015 survey by student money site Save the Student found that students across the UK spent, on average, £745 each month - a modest increase from the £735 students spent per month on average the year before. The biggest proportion of that (£373, over 50 per cent) went on rent. Food totalled £110, while socialising - arguably a very important part of the university experience - accounted for £67; sharply down on the £120 claimed by students in 2012. Other significant costs included monthly utility bills (£37) and travel (£48). So, if your child is starting university this September, why not use these figures as a budget template - although don't forget that inflation is currently running at 0.9 per cent (CPI) and it could rise next year. Try using a budget calculator like this one from This is Money.
Cut back on living expenses or take a part-time job
Once you've sat down with your child and drawn up a budget together, you'll need to work out whether your child's student loan will be enough to cover their outgoings and if not, whether they can cut back on living expenses. Alternatively they could take a part-time job or you might be in a position to help. In addition to a loan for tuition fees, full-time students in the UK can apply for a maintenance loan of up to £5,740 a year when living away from home, outside London, for courses starting in September 2015, equating to a budget of £637 a month over a nine-month academic year. However, if we compare this to the Save the Student survey average monthly spend of £745, that's a shortfall of £965 over the academic year. In 2016, the maintenance loan will be increased to £8,200 per year for students studying outside of London. This increase has been put in place to accommodate, in part, a cut to government maintenance grants, which until 2016 provided students from lower income households with a £3,387 per year, non-repayable grant.Student expenses vs. maintenance loan received
Managing their money
The shortfall of £965 is a significant sum of money, but it's not unachievable. By working together, students and parents can make all sorts of small spending changes to build up a little extra cash - think packed lunches versus packed cafés, and work up from there. Next they'll need to work out how to manage their money. If they're shopping around for a current account, look at the range of perks that may be available - are there savings on travel, for example, or free apps which make checking balances quick and easy?By working together, students and parents can make all sorts of small spending changes to build up a little extra cash.
Students will normally be required to have their loan paid into their current account. This means that a few times a year, they'll receive a substantial cash injection of a couple of thousand pounds. So it's vital to teach them the importance of budgeting for each term, ensuring they know not to blow the lot during the first week.By working together, students and parents can make all sorts of small spending changes to build up a little extra cash
Avoid common pitfalls
Even some super-organised students can find themselves in the habit of saving only by leaving the money they need to cover bills in their current account and then transferring the rest into an easy access savings account. This can then be accessed to pay for food, nights out and the odd treat. Jake Butler, Operations Director at Save the Student says "Socialising is a big part of university lifestyle. However, I think that students should be wary of how much they are spending on 'non-essentials' such as nights out."
Even the most organised students need to be aware of some common pitfalls. Watch out for:Overdraft facilities that charge interestHigh charges for exceeding overdraft limitsCredit cards which charge interest on purchases, or which have short interest-free periods - potentially leaving you with a hefty amount to pay once this ends
Another aspect to student's life that has a very real financial impact is where they are going to live. In campus accommodation, things are made somewhat easier as the rent is generally set by the university for the nine months of the academic year, and deposits aren't usually required. So unless your child causes damage to their room, rent should be the only cost as bills are usually included, and sometimes meals too - making it easier to budget. Renting in the private sector can be more complicated. It's common to have to pay at least six weeks' deposit up front, as well as the first month's rent, and leases typically run for a full year. This means your child may be liable for rent over the months they're not in their student town - over the long summer break, for example.
Utilities are also unlikely to be included, so students will need to manage and pay for their own gas and electric bills, and organise internet access. It also makes sense for them to agree up front how these are going to be split with housemates - and to work out if there are any responsibilities for your child in particular, such as being the named account holder responsible for collecting and paying the money for a bill."It's common to pay at least six weeks' deposit and the first month's rent up front"
Private sector rentals - how to get your deposit backKeep the bedroom and communal areas neat and tidy. Set up a weekly cleaning rota and take it in turns to share jobs like vacuuming, mopping the kitchen floor and cleaning the bathroom.Carefully check the itinerary when moving and bring any missing items to the landlord's attention so there won't be charges if they're not there when it's time to move out. If anything is lost or broken, replace it before moving out.Make sure the property is spic and span when moving out - otherwise the landlord will employ their cleaner of choice and charge it to the outgoing residents.Always pay the rent on time. Setting up a standing order from a bank account can help achieve this
Money lessons from my first year
By Teresa Ferrara, aged 19, studying primary education at St Mary's University in London.1. Sometimes budgets can be too rigid 1. Sometimes budgets can be too rigid
Before leaving for university, I sat down and worked out a budget with my parents. I think they were afraid that I'd see the loan money go into my account and just go mad! But in fact I did the opposite. I was so scared of running out of money that I hardly spent anything in the first few weeks - I even went under my already tight budget.2. The price of things can astound you
Before leaving for university I was living at home, with my parents paying for pretty much everything. When I went to university I lived in catered halls, but I'm a really picky eater so ended up not being able to eat many of the meals on offer. It meant I had to find my own food at the supermarket and I was amazed at just how much a small bag of shopping could cost.
3. Unforeseen expenses can nearly tip you over the edge
Even though my budget was pretty controlled, there were still some things that cropped up from term to term that could stretch me to the limit. Every now and then I'd have to pay for an extra course module or expensive text book I hadn't realised I'd need. Then there was my six-week work placement. I hadn't realised they wouldn't pay my travelling expenses, which after six weeks really mounted up.4. You may not need any additional funding if you plan ahead
My mum wouldn't let me take out an overdraft - she thought if I knew the facility was there I'd be tempted to use it and then not be able to pay my rent. She said she'd rather I ask her if I needed money - but I never had to. My loan was enough. I think it was because I was so controlled with my spending.
Money saving survival tipsMoney saving survival tips
Part of earning a student's spurs is learning to do more with the limited money available. Share these top tips with your child:Talk to each other for free by downloading smartphone or laptop apps such as SkypeCheck out voucher websites for money off lots of everyday purchasesLook out for second-hand books on the university's intranet or onlineCheck out the local charity shop scene for vintage clothing findsNever go to the supermarket hungry and cook meals in bulk-individual portions which you can defrost and put in the microwave when you need themHome cooking, away from homeHome cooking, away from home
Cooking healthy, interesting food on a budget can be one of the challenges of living on your own. Encourage your child to try these books for pointers in the right direction. Sam Stern's Student Cookbook Nosh for Students: A Fun Student Cookbook The Student Cookbook by Hamlyn The Really Useful Ultimate Student Cookbook The Essential Student Cookbook: 400 Foolproof Recipes to Leave Home with
Online help for students
There are many websites that offer impartial help and advice to students on all sorts of topics, from money to cooking and health. These include: www.thestudentroom.co.uk Essential resource covering all aspects of student life www.thestudentguide.com Bringing the essentials of student life and fun www.nus.org.uk/en/students-unions Get close to your local union www.studenthealth.co.uk Don't forget your health while you're working and playing hard www.studentrecipes.com Written by students, for students www.savethestudent.org For a focus on student financials
The views expressed here are solely those of the author,
and do not necessarily reflect the views of M&S Bank.
First published 20/08/2013