If you are off to university in September, your head will be full of worries and excitement about living independently, studying, and how to manage life in a new city. It might be a little overwhelming at times, but with forethought and planning you can organise your money and get to grips with the financial side of life.

Managing money is often the biggest concern for new undergraduates, but the trick is to know your figures, set a basic budget where you can, and stick to it. One of the first decisions to make though, is which student bank account to open.

Student bank accounts

Most of the top UK banks operate specific accounts for undergraduates. In general, they offer 24-hour online banking, mobile apps, and interest-free overdrafts subject to eligibility.

NatWest Uniproof Account:
• Free arranged overdraft facility of up to £500 in the first term, £750 in the second, and £1000 in the final term
• Free Tastecard membership (currently worth £79.99) if you sign up for online banking and paperless statements. This entitles you to 50% off meals in a range of UK restaurants.

HSBC Student Bank Account:
• Free overdraft facility of £500 on signing up
• Up to £3000 overdraft limit subject to eligibility
• Credit interest of 1.5% AER/gross on the first £1000 in your account
• Student credit card with a limit of up to £500, subject to status
• Commission-free foreign currency on amounts between £100 and £2500

Santander Student Account:
• Free Santander 16-25 Railcard, valid for four years
• Interest-free overdraft of up to £1500 per year if £500 is paid into your account at the start of each term
• Credit interest of 1% AER/gross on balances of up to £500

In terms of added extras, Santander’s free Railcard is probably the most useful for students, especially if you are a long way from home. It saves a third on the cost of most rail travel in England, Scotland and Wales, and is valid for four years.

Budgeting and money-saving tips

Budgeting is simple once you get into a routine. It just needs commitment, and an awareness of how much you are spending. The first thing to do is calculate the total of your maintenance loan and any grants, wages if you intend to work, and any money from your parents. Then make a list of regular bills, such as food, electricity, insurance and books. Also factor in birthday and Christmas expenses, and the cost of running a car if you have one. The money left over is disposable income, but you need to make sure you don’t overspend.

There are lots of things you can do to save money in this respect:
• Take a packed lunch or eat in at lunchtime
• Rather than buying expensive take-away drinks, use a thermal travel mug for taking coffee/tea to lectures
• Apply for an NUS student discount card – this can get you 10%-15% off prices in a wide range of shops
• Choose ‘basic’ supermarket brands to keep your food bills down

The main objective is to live within your means rather than splurging all your money at the start of term. Divide the maintenance loan over three months to budget for living costs, and you are halfway there.

Knowing the difference between ‘good debt’ and ‘bad debt’

Not all debt is created equal, and although you get a good rate on student loans, it’s not always the case in other areas. Interest-free bank overdrafts are the next best way to borrow, but after that, debt can quickly spiral out of control if you are not careful.
Knowing how to use credit cards effectively is an important part of managing your money at university, as the temptation to spend without thinking can be overwhelming at times.
The important thing to note is that only paying the minimum amount off a credit card each month allows the interest to build up, and makes it increasingly difficult to pay off what was originally a manageable amount.

This point is well-illustrated by the Money Saving Expert website, “If you borrowed £3,000 aged 21, and only made the minimum credit card repayments, you’d be 50 before it cleared.” Paying off the total amount owed at the end of each billing period gives you interest-free credit for a very limited time, but go beyond this timescale and you could be hit with huge rates of interest. Of course, there are ways to supplement your income. Taking a part-time or seasonal job whilst at university can provide a better lifestyle, but you need to weigh this up against reduced study time. Just check you are on the correct tax code, as overpaying tax adds up to a significant amount over a year.

Paying for higher education is an investment, and remains a popular choice even with the recent increase in tuition fees. You don’t need to be cash-strapped at university or debt-ridden when you leave – just make sure it’s memorable for all the right reasons.

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