If you’re a student, this school year probably doesn’t look exactly the way you had hoped. The pandemic has added a new layer of concerns – and that’s on top of the usual challenges students face as they adapt to university life. (You know, like making new friends, studying for exams and trying not to blow your whole month’s budget in the first few days.)
While we may not be able to predict the next wave of social distancing regulations, we can offer some advice on thinking smarter about your money. We spoke to five students to answer their most burning money questions, in partnership with NatWest.
Are you ready to get cash clever?
1. Waste not, want not
“I worked through summer to earn money and want to enjoy it, but I’m worried I’m going to lose track and waste it all. How can I keep track?” – Anjeli, 18, University of Sheffield
The simple answer to this is budgeting! It might sound daunting, but setting spending limits is the best way to make sure your money covers necessities like rent and bills before you splash out on occasional treats.
“Whether you write your budget down on paper, use an app or fill in a spreadsheet, make sure you set aside money for your essential expenses so you know they’re taken care of. Next, pop some money into your savings (Future You will be pleased), then have fun with what’s left over,” says Kia Commodore, a personal finance expert.
2. Dare to discount
“How beneficial are student discounts? Will I actually save?” – Grace, 21, University of Salford and Cosmopolitan Home Made housemate
As the saying goes, look after the pennies and the pounds will look after themselves. Take advantage of discount schemes like TOTUM, Student Beans and more, and keep an eye out for brands and bank accounts that offer free gifts for signing up with them.
“Discount codes are a blessing! Businesses know that students generally have less money to spare, so they slash prices or offer incentives to get you to shop with them,” says Kia.
Just be careful not to let the discounts tempt you into buying something you didn’t actually need in the first place!
3. To tax or not to tax…
“How does being self-employed and being a full-time student work in terms of registering yourself for and paying taxes?” – Asyia, 20, UCL
Luckily for students, you only have to start paying tax once you’ve earned over a certain amount of money; the tax-free allowance for how much you can earn per year before you have to start paying tax is £12,500 for 2020/2021.
“Being a student doesn’t affect how much tax you have to pay, but many students with a part-time job won’t exceed their tax-free allowance. If you do have a side hustle or freelance work that pays over £1,000 a year, you can register yourself as a sole trader (which means you work for yourself) through the HMRC website,” explains Kia.
4. Give yourself some credit
“Should I get a credit card? Is there a particular advantage to getting them as a student, and do they have any short-term benefits that debit cards don’t have?” – Riddhi, 20, UCL
Credit cards can be powerful tools when used correctly, but you should only get one if you’re sure you’ll be disciplined and use it in the right way.
“If you believe you may be tempted to splash the cash without paying it off at the end of each month, then hold off on applying. The potential debt spiral you might find yourself in isn’t worth it, especially when you can get an interest-free overdraft on a student bank account,” Kia advises.
5. Bills, bills, bills
“How much of your monthly income, percentage wise, should go on student rent?” – Mollie, 22, University of Manchester
Depending on where you go to university, student rent can creep up pretty quickly.
“Student rent shouldn’t be more than 50% of your income, whether that be from working or a student finance loan or grant. If it is, don’t worry too much – university accommodation, especially when living in halls, does tend to be very expensive. The most important thing is that you can pay your rent while having enough money to live comfortably,” Kia says.
Get to grips with what university life really costs in 2020 with NatWest’s Student Living Index
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