Forward planning (and a job) can pay the bills

Keep a close eye on your finances and don't give in to debt, says Amy McLellan

Published: 16 August 2006

Contrary to what you may have heard, student life is not dominated by debt, dodging the bailiffs and eking out a tin of cold baked beans until your next loan payment arrives. Yes, money will be tight for the next three years, but freshers' week is not an induction to a life of penury.

Sensible financial planning starts with working out a budget. Use an online ready reckoner (see your university website or nus online.co.uk) to calculate your likely incomings and outgoings. Make sure you understand when your loans, grants and bursaries are due to be paid and check whether they will arrive in lump sums or instalments.

The next step is the student bank account. Banks are falling over themselves to sign up students but don't be tempted by free CDs or haircuts: your priority is an account that offers a generous interest free overdraft and, importantly, offers reasonable terms to pay it back on graduation. If you do feel the pinch between loan payments, speak to your account manager to agree an extension to your overdraft; otherwise you run the risk of excessive charges and fees. Try to stay clear of credit cards: some students swear by keeping a credit card on standby for emergencies but the interest rates can be ruinous.

If you're staying in halls, your bills will be included in your weekly rent. Self-catering halls are cheaper but you will have to fork out for food, which can cost another £40-£50 a week. Try to shop with friends so you can share the costs of basic essentials, such as cooking oil or washing up liquid. Those renting in the private sector are responsible for all bills and will also have to fund the cost of travelling to and from campus (make sure you apply for any student travel discounts - they can make a real difference).

All students, whether in halls or not, should invest in insurance, which can cost as little as £18 a year: a small price compared to the cost of replacing stolen laptops, phones and CDs. And if you haven't done so already, swap your mobile phone contract for pay-as-you-go.

Be prepared to bust your budget over the first month or so, however. It's always expensive to start a new life in a new town: you will need to invest time and money to get your social network started.

There will be other unexpected bills. Textbooks can be expensive (around £25 a go) so get to know your way around the library as soon as possible. There's also a thriving market in second hand books: ask your student union for details of book sales or check out web sites like Amazon and eBay.

It's increasingly common for students to work part-time during term time and often full-time during the Christmas and summer holidays. It won't be glamorous (think restaurants and retail) but it will help pay the bills. Make sure you get the minimum wage and holiday pay: student labour doesn't mean cheap labour.

If you do find that your finances are stretched to breaking point, don't panic - and don't ignore it. Universities understand how tight funding is for students and have skilled advisers on hand to help, not to mention access to hardship funds and crisis loans to help you through a rocky patch. Money, or rather the lack of it, needn't spoil what should be the most exciting and enriching years of your life.