In your first month of lectures you might not feel that your stay at University will be a short one, but in the grand scheme of things it is. Unfortunately, those three years you spend at university can cause you problems for the rest of your life if you are not cautious with your finances.
Lenders love students, who are often managing their own finances for the first time and living away from home without mum to keep an eye on them. Freshers are often lured into accounts with huge overdrafts (and huge charges) by free gifts such as iPods but it’s important to remember that if you choose an account with student-friendly rates, it’ll save you more money than the iPod is worth in the long run!
This year’s Freshers are set to leave Uni with around £15,000 of debt in 2010. Although loans through the Student Loan Company only accrue interest in line with inflation (and so are technically interest-free), overdrafts, other loans and credit cards certainly are not. You are also likely to have to start repaying these debts immediately, whereas a Student Loan is only repayable from the April after graduation, providing you earn over £15,000 per year. That number ringing a bell? Yes – most graduates are saddled with debts as great as their entire yearly salary, and it’s only going to keep growing through interest.
So how can you make sure you don’t start your working life drowning in debt? Phillip Allen, Managing Director of Debt Lifeboat, offers his top 3 tips;
“1 – Don’t borrow more than you need to spend. For example if you absolutely must have an overdraft, start off with the minimum amount and really think before you make each purchase. If you dive straight in with a £2,500 limit, you’ll fritter it away on clothes and beer in no time. Make sure you fully research every loan or credit card you take out (ask your parents for advice if you need to) to make sure you’re getting the best rates and not being exploited.
“2 – Buy and sell wisely. Amazon sell virtually every course book either brand new or second hand and most of the used books are unscathed but half the price. At the end of each year, work out which books you will still need and put the others up for sale. If you take care of them you can still get a good price and help out other skint students.
“3 – Don’t waste your holidays. It’s tempting to lie back and do nothing over summer but if you find a temporary full-time job you can earn a good few hundred pounds – and because you’ll be in work all day, you’ll spend less on finding ways to entertain yourself. If you can find work relevant to your course it will increase your employability when you graduate, and can even get you a higher salary – which of course means you can pay off other debts sooner!”