Money is notoriously tight for students. While student loans should cover the cost of tuition, the availability and levels of maintenance loans and grants can often mean that ends don’t quite meet for those who are studying.
You may be supporting your children or grandchildren with some extra money while they’re studying. Even so, it’s still a good idea to share some financial tips with them so that they make the most of the money they have.
Good money habits can stick for life, too. That’s why sharing these 10 financial tips with children or grandchildren at university can be so useful, both for now and for the future.
Please note that we’ll refer to “your child” throughout this article. Even so, these tips will still apply to anyone you know who’s studying, from children and grandchildren to nieces and nephews.
1. Create a budget
The first tip for anyone managing money is to have a budget. Encourage your child to create their budget, listing all their incomings and outgoings each month.
This gives them a clear, visual way to see exactly where their money goes. Crucially, it may also reveal areas where they could reduce their spending and save more.
MoneyHelper, a government-backed service from the Money & Pensions Service, offers a useful online budgeting tool to help do this.
2. Save a little bit each month
Once your child has a budget in place, you should encourage them to start thinking about their savings goals.
There are many temptations at university where it’s easy to spend frivolously, so creating a set savings goal helps to ensure that your child will always keep money aside.
One common saving technique for students is to save £20 from their loan each month into a savings account or ISA. If they did this every month during term time for three years – the length of a standard course – they could have upwards of £600 plus any interest to kick off their post-university lives.
3. Prioritise the things that matter
A key money lesson that becomes even more important while studying is the ability to decide whether purchases are “wants” or “needs”.
For example, your child may want to go on holiday with their new housemates or buy a new phone, but they really need vital textbooks for completing their studies.
This might be the first time in their life where they have to choose between these two things, and so it’s important that they make the right choice.
Make sure your child understands the importance of choosing the things that matter. This is a vital life lesson as, while you likely have things that you want, you almost always have financial obligations that you need to meet first.
4. Have a “no-spend” day each week
Another good technique for saving money at any time in life is to have at least one “no-spend” day each week.
Encourage your child to take just one day a week to stay home, cook dinner, and relax, rather than going out.
Going out for dinner or to clubs can be expensive, so your child will see the financial benefit of this in real time.
5. Always make a shopping list
A classic way to save money both as a student and in later life is to create a shopping list whenever you need to buy things, so suggest that your child does this.
This is a useful piece of advice as otherwise shopping trips can turn into a free-for-all where your child ends up spending more than they can afford on things they don’t really need.
6. Know your rights as a tenant
One of the biggest financial dangers as a student is housing, especially when dealing with untrustworthy landlords.
A lot has been done to curb poor landlord behaviour and there are now many more avenues for seeking support than there were historically.
Even so, encourage your child to know their rights as a tenant, including, for instance, checking that their deposit has been registered correctly, and that they know where it is and how it is held.
This is a good trait to carry into later life, as it means they’ll learn how to stick up for themselves and their money in similar consumer rights situations.
7. Be careful with your overdraft
Student bank accounts often come with large overdrafts to help bridge the gaps at the end of the month.
While these overdrafts are usually interest-free during their studies, explain to your child why it’s good practice to try and stay above that line.
Tell them that, why it may not be an issue now, owing money with interest can quickly rack up, meaning you end up losing more money over time.
8. Consider building your credit score
Staying out of overdraft debt is good practice while studying. Even so, university still presents a chance to start building good credit.
Suggest to your child that they take out a credit card and use it for small purchases, which they then pay off entirely each month, interest-free.
This has the joint benefit of starting to build a good credit score, while also teaching them the basics of how to handle credit for the first time.
Of course, it’s important to teach them to be responsible with credit; remind them that it should be an addition to their monthly spending and that they will have to pay it off each month to get the most benefit, rather than them seeing it as access to “free” money.
9. Make sure bills are split fairly with housemates
An important lesson for all students to learn is to make sure they fairly and effectively split household bills with their housemates.
Even if it becomes their responsibility to administer the bills, make sure your child always follows up on their housemates for their share. Otherwise, they may end up paying someone else’s bills!
This is another lifelong lesson that will serve them well, especially if they house-share in the future.
10. Spending can save you money in the long term
While most of the advice you can give your child will be about saving rather than spending, there may be times when spending can save them money in the long term.
For example, spending on things as decadent and seemingly unnecessary as an Amazon Prime or Sky Sports subscription may look like a waste of money while studying.
But get your child to consider how much they may have to spend on delivery for goods without Amazon, or how much they might spend on drinks if they went to watch live sports at a pub.
It may work out to be more cost-effective to spend money upfront to save money moving forward.
The same will be true for products in their future, such as life insurance or even financial advice. This is an invaluable lesson to learn.
Speak to us
If you’d like to find out how you can secure your financial future for your children, grandchildren, or anyone else you support, please get in touch with us at Britannic Place.
Email [email protected] or call 01905 419890 to find out more.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.