We’re half way through September, which can only mean one thing – Freshers week! Freshers week offers an experience that is usually enjoyed once, but never forgotten. For most it represents the first steps of independence, setting foot into a new world, never looking back.
And whilst much of it will be stepping into the unknown, there are some things you are guaranteed to experience:
- – Drinking. And lots of it. No matter what the event, whether a city tour, dance class or quiz night, all will involve drinking.
- – You’ll sign up to at least 10 clubs. Rowing club, French club, Jazz club, they all seem like a great way to reinvent yourself and make friends. October will then be the month of unsubscribing to club emails.
- – You’ll be convinced you’ve met your uni squad on day one. Freshers’ Week is a highly sociable time. – You will instantly make friends, convince yourself they’ll become your squad, and then never cross paths with them again.
- – Every year, a fresher inevitably sets off the fire alarm in their halls, thus prompting the local fire brigade to show up and evacuate the building. If this is you, console yourself with the thought that (eventually) it will be a funny anecdote.
- – You’ll neglect your diet and completely ignore basic chores like doing your laundry and washing up. As your bedroom floor disappears under a pile of dirty clothes and underwear, you’ll discover a new talent for making meals out of the most bizarre combinations of ingredients.
One other area you will experience, which isn’t quite so exciting is managing your finances. Living at home until now, chances are you haven’t had to worry too much about this before. For many, what you earnt was yours to spend. Now however not only do you need to focus on your education and socialising, but you also need to plan and budget.
Against the backdrop of freshers week, this may all seem extremely dull, but you’ll appreciate the advice when you leave university.
The cost of university
People often talk about how much debt students accumulate whilst at university (currently estimated to be over £50k). The issue however is not so much the amount of debt you build up, but rather the impact the monthly repayments can have on your future financial goals such as buying a house.
Once you graduate and start working, provided your salary is over £25k (current levels), you will need to repay 9% of everything above £25k. That means if you earn £30k, you will repay £450 (9% of £5k) per year. If you earn £40k it will be £1,350, and so on. This money is deducted directly from your salary.
Whilst these may not seem like large amounts, they could impact your ability to get on the property ladder. The reason being that when mortgage lenders assess an application, whilst they won’t usually factor in outstanding student debts, they will look at your disposable income. If they feel your disposable income isn’t enough, they may reject your application.
As well as the impact on your ability to buy a house, you may also find your pension impacted. With your disposable income reduced you may find yourself prioritising current expenditure over your long term goals (such as retirement planning). Research conducted by Royal London estimates that those who graduate with outstanding student loans will retire with a pension pot a fifth lower than those with no student loan repayments.
So what’s the answer? Budget management.
How do I construct a budget management plan?
The easiest and quickest way to manage your budget is to use a spreadsheet. Start by listing all your earnings/incomings. This may include savings, loans, grants, money from parents, and income from jobs.
With your earnings/incomings it’s important to prioritise which money you will use first. For example; if you have savings or income from a job, prioritise this money before you start accessing student loans or credit cards. Remember the key is to try and avoid using your student loans!
Next list all your outgoings such as rent, utility bills (e.g. energy, water, council tax), phone bills, food, transport, tuition fees, textbooks, clothes plus any other expenses. These outgoings should be classified into two types – those costs which are fixed such as rent, and then those which are variable such as socialising.
With your outgoings it’s worth seeing where you can be clever to help keep your outgoings down. Money Saving Expert has put together a useful list of 60 plus tips which is very helpful.
Finally, try and ensure you have an emergency fund in case you are on the end of any unexpected outgoings. As per the name, this money should only be accessed in an emergency. A last minute invite to a night out doesn’t count!
As with many things, it’s all about moderation. Of course, you need to enjoy yourself at university, but at the same time, try and apply a sensible approach to your financial position. Your future self will appreciate it!
To quote Robert Kiyosaki (author of Rich Dad, Poor Dad) “Your future is created by what you do today, not tomorrow.”
Good luck & enjoy!