Student money lessons: 10 ways to cut costs and 7 finance basics

  • In 2019/20, the average combined tuition fee and maintenance loan was £15,400. The average will hit £16,7000 in 2026/27.
  • The average debt for students starting last year is expected to be £45,800, and only one in five are expected to pay it all back.
  • When the system changes next year, graduates will leave with an average of £43,400 in debt, and 55% are expected to repay it all.

Source: House of Commons Library

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:

“It’s tempting to think that once your child has passed their A-Levels and got into university, the hard parenting work is done. However, you’ve just graduated from being Mum and Dad, to becoming The Bank of Mum and Dad, and if you’re going to avoid a run on this particular bank over the next few years, with prices rising so alarmingly, it’s worth arming your offspring with all the money tips they need to make the right start in their adult life.

In an ideal world, parents can drip feed vital lessons about budgeting, planning, borrowing and saving to their children over the years. However, you can’t always do everything, and you still have weeks to get the basics sorted.

Some money lessons are essential, but can feel excruciating for teenagers, especially when they’re fairly certain they know much more about life than you do, so it’s worth mixing sensible planning tips and cost-cutting measures with some words that will appeal – like ‘freebies’, ‘mobile phone’ and ‘Apple’. There are ways to cut costs that incorporate them all.”

7 money basics

  1. Move money from your maintenance loan out of your account on day one. If you get this loan, you’ll be paid in just three instalments each year, so there’s a real risk of accidental overspending. Some people immediately transfer enough money for bills and rent into a separate account, so they’re never tempted to dip into cash meant for the essentials.
  2. Face the boredom of a budget. It may feel like a chore, but take the time to complete a budget planner, so you can plan for everything you need to spend. It’s incredibly difficult to know what costs you will face when you’re starting out, which is where some help from parents can come in handy.
  3. Understand your overdraft. It’s worth picking an account with as big a 0% overdraft as possible. However, you need to be really clear what this is for. Don’t put it in the same bracket as your student loan, and don’t think of this as money you can spend on whatever you like. This is for essential purchases if your budgeting goes wrong – and you can never afford to go over your agreed limit. When you graduate, you’ll have to pay it off as quickly as possible or you’ll end up being charged sky-high interest rates – so this money isn’t free forever.
  4. Be careful about credit cards. Your bank may well try to sell you one, and the minimum repayments will make it look like an easy way to afford what you want. However, if you’re not paying it off, you’ll be racking up major interest charges, and it all have to be paid back eventually. If you’re not earning, this is going to give you a real mountain to climb.
  5. Dodge store cards. They’re horrendously expensive, and even if you sign up to one for a discount, you can easily be tempted to spend more than you can afford on things you don’t need.
  6. Take buy-now-pay-later seriously. It might feel like a free way to spread the cost, but it’s debt. If you use it, you need to understand exactly how much you’re borrowing, and the total of all your repayments. You also need to appreciate the consequences of missing payments – which in some cases will go on your credit record. Like with any debt, think before you buy. If you don’t really need it right now, you shouldn’t be borrowing to pay for it.
  7. Don’t forget tax. Check your council tax bill: students don’t have to pay, so if you’re a full-time student living with other students, you shouldn’t have to pay any council tax at all. If you’re working, make sure you’re paying the right income tax too. If you’re earning less than £12,570 a year, you shouldn’t be paying it, so check your payslip.

Ten ways to cut costs as prices rise

  1. Make sure you sign up for everything you need, and nothing you don’t. If you’re covering your mobile phone bill, broadband and media packages for the first time, think carefully about what you need. Don’t let the salesperson foist extra services on you, but don’t scrimp either because when it comes to your mobile, going over your allowances is expensive.
  2. Get student discounts. Sign up to sites like Unidays and Student Beans for online discounts. Then ask in store and check any website whenever you buy. A huge number of brands offer cheaper deals for students – including Apple, Amazon and Spotify.
  3. Consider investing in discount cards. Among the most valuable are the NUS Extra Card and the Young Persons Railcard. Some parents send their kids to university with both, and right now you can buy the railcard with just £10 of Tesco Clubcard Points
  4. Take advantages of freebies. One of the best is Microsoft software, which is free for students, but there are lots of online communities dedicated to tracking down free stuff and letting people know about it – from Money Saving Expert to Save the Student, and HotUKDeals.
  5. Build cheap or free habits with your friends. Nights out are hugely expensive, so rather than feeling you need to spend in order to see your friends, plan regular evenings in together or free activities.
  6. Learn to cook before you go – at least a few dishes. It’s by far the cheapest way to feed yourself.
  7. Sign up for supermarket reward cards, which will offer points and some big discounts. When it comes to spending the points, you might need the money off your supermarket shopping, but if you spend with ‘partners’ you can get up to three times as much value.
  8. Don’t be wedded to premium brands, and don’t just buy what your parents do. Supermarket own brands and budget ranges are a fraction of the price.
  9. Shop for food in the evening – check when the local supermarket puts out the yellow sticker bargains, when prices are slashed to clear.
  10. Sign up to toogoodtogo.co.uk, where you can get ‘magic bags’ of food for a fraction of the full price at the end of the day. Use it carefully though. There are plenty of grocery stores on the list which can offer brilliant bargains, but there are also sandwich shops, and it’s still cheaper to make your own.