Despite the seemingly endless criticism regarding the student loan system in the UK, this is also one of the most generous funding mechanisms of its type anywhere in the world.
There’s no doubt that everyday life can still be tough for students, however, especially as they look to manage their finances effectively and make their money stretch as far as possible.
In this post, we’ve prepared a brief guide to help you budget as a student without incurring unnecessary debt.
1. Assess your Incomings
When starting a budget, one of the most important considerations in the amount and the frequency of your incomings.
Your student loan is paid into your bank account in three separate instalments at the start of every term, for example, and these bulk payments can create a slightly distorted financial reality.
This needs to cover the duration of the term, however, while you’ll also need to create a small contingency fund for unexpected payments and emergencies.
If you have established an additional income stream through a part-time job or side venture, you should also factor this into your incomings over the course of the term.
Similarly, if you’re required at any point to take out a short-term loan for students, include this in your incomings while also calculating the total cost of borrowing and final repayment.
2. Work out your Outgoings
The next step is to list your outgoings, including everything from the money that you spend on accommodation to the cost of food, socialising and learning resources.
Once again, it’s important that you deal in pence rather than pounds when calculating your outgoings, as this helps you to create a realistic and accurate insight into your finances.
Even if you aim to reduce your outgoings going forward, be sure to record the precise amounts that you spend in real-time. This will ensure that you have a detailed understanding of your current financial circumstances and the necessary changes that you’ll need to make going forward.
3. Work out your Disposable Income Levels
The final stage is to subtract your outgoings from your income, in order to create the precise amount of disposable income that you have over the course of the year.
Ideally, you’ll break this down further to determine how much money you’re able to spend every single week, as this will create an actionable budget that is well within your means.
Essentially, this sets a spending limit that should not be exceeded, helping you to minimise your debt and stretch your funding across each term.
Just remember to keep updating your budget as your circumstances change, while we’d also recommend using an app to help manage this process.