11 April 2016

University budgeting for parents

Starting university is a big change, so it’s understandable that your son or daughter’s attention may stray from budgeting to the numerous more exciting aspects of student life.

By creating a student budget with your child and sharing simple money-saving tips you could help them to get into good spending habits from the start.

If you have younger children and want to make sure that you are able to support them when the time comes, check out our guide to long-term saving for children.

How to create a student budget

Unless you plan to relive your youth and accompany your son or daughter to university, it will be up to them to stick to their budget.

What you can do is help them to work out a realistic financial plan:

1. First, calculate their total incoming money. This might include:

  • Student loans
  • Grants, bursaries, sponsorships or scholarships
  • Any family contributions
  • Savings or earnings from a part-time job

2. Take away essential spending (varies depending on location and lifestyle)

  • Tuition fees – up to £9,000 per academic year
  • Rent – £360-£700
  • Travel costs – about £709 per academic year
  • Phone bill – £10-£50
  • Food – £140-£250
  • Course materials that cannot be borrowed from the library – £10-£390
  • A share of household bills – internet, TV licence, water, gas, electric, contents insurance
  • Leisure activities such as cinema and going out, or sports equipment

3. Check whether what’s left is enough for non-essential purchases

A part-time job might be worth considering, either during term-time or the holidays, to supplement their income. Think about the kind of job that may offer useful ‘perks’.

4. Factor in initial expenses for the first month

There are likely to be some one-off costs during the first month such as an accommodation deposit and signing up for clubs.

Don’t be taken in by promotions

For a student focussed on freshers’ week fun, getting £100 for opening a bank account is very appealing.

Teaching your son or daughter to consider the long-term value of these financial products could help them to avoid building up credit card debt.

Student current accounts

  • Free overdrafts can be great, but the bank will check a student’s credit rating and length of stay in the UK before giving them access to the full sum
  • Does the overdraft continue for a year after they leave university?
  • Make sure they know their overdraft limit
  • If your son or daughter definitely will not need their overdraft, they could consider investing the money in a savings account or opt for an account with high credit interest

Student credit cards

  • Can offer greater protection than debit cards
  • Allow a student to establish a credit history, providers usual offer lower credit limits, typically either £500 or £1000 to limit spending and stop them building up too much debt
  • Using the card to withdraw money can be very expensive
  • It’s a good idea to clear the balance each month to avoid paying interest

Top money-saving tips

Some people take great pleasure in finding a bargain, but it doesn’t always come naturally.

The good news is that there are a whole host of discounts available to students, as well as plenty of ways to avoid overspending where you don’t have to.

Discounts and freebies

As well as checking which discounts are available with their matriculation card, your child might want to sign up for additional cards or sites, such as NUS Extra or UNiDAYs. Discounts can encourage unnecessary purchases, so weigh up the cost of the card with the value of the discounted products that they would buy anyway.

Ask your son or daughter to consider three things before they make any kind of purchase:

  1. Do they need it?
  2. How much does it cost, not how much is it reduced by?
  3. Would they normally buy it?

Don’t forget that:

  • Full-time students in Scotland, England and Wales do not have to pay council tax
  • Prescriptions are free to residents of Scotland, Northern Ireland and Wales, but not England*

*If your son or daughter is 16-18 and in full-time education they do not have to pay for prescriptions in England. Once they are 19 they can apply to the NHS Low Income Scheme to get free prescriptions, dental treatments and eye tests.

Avoid overspending

Your son or daughter may be used to premium supermarket products at home, but a blind taste test could reveal where they’ll notice the difference in price but not taste. Shopping in the afternoon can also be a good time to pick up discounted produce to eat that day.

According to the National Association of Student Money Advisers (PDF), taking a flask of coffee with them could save students £40 a week and making a packed lunch could cut £260 from their outgoings.

Support with managing your money

To find out more about creating a budget, spending wisely or cutting back, whether for yourself or your child, check out our guide to managing your money.

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