Heading to uni? A fresher’s guide to first-class finances

As students get ready to head off to university or college, many are about to get their first real taste of financial independence – for better or worse.

Starting out as you mean to go on with good financial habits can at least help take some of the stress out of university life (even if it doesn’t make your studies any easier!), and hopefully mean less debt at the other end.

Here are five top tips for getting to grips with your finances as a student…

Choose the right bank account

Rachel Springall, a finance expert at Moneyfacts.co.uk, says: “The best account will depend on how much the student expects to borrow, the benefits they feel are essential to have included, and any additional perks.

“Some providers attempt to entice students with discounts or gift cards, but these incentives could be a waste if not used frequently.”

Highlighting some deals on the market this month, Rachel says students looking for a “sweetener” may well find HSBC’s offering of £100 in cash up-front, as well as an incentive bundle of student offers and discounts and a free 12-month British Cycling Fan Membership, attractive.

Meanwhile, NatWest is offering a £10 Amazon gift card up-front and throwing in one year of Amazon Prime Student membership. Or, students can instead choose its free National Express Coachcard or tastecard, which may save them more money if they plan to travel frequently or venture out to eat.

Springall also says Halifax and Santander offer particularly generous interest-free arranged overdrafts for students from the outset, of as much as £1,500. “It’s important students keep in mind that overdrafts are not guaranteed and it’s vital they use any limit sparingly – overdrafts are a loan and will need to be paid back eventually,” she notes.

Make a budget

There are plenty of free-to-use budgeting tools available online. Make sure you try to set enough money aside to cover all your outgoings, including spending. It may be harder to calculate shared bills if you have housemates.

It may be easier to keep a separate easy access savings account for social activities, to make sure social spending is not eating into money you’ll need for essentials such as household bills.

Try to break down your spending habits into weekly amounts, to make sure any lump sums of cash will last for however long you need them to.

Deal with your debts

The sooner you speak to someone, the more options you’re likely to have to get out of the situation. Rachel says: “It’s important that students keep an eye on their day-to-day spending by using online tools and mobile apps.

“If students start to struggle financially they would be wise to seek out some advice, either from their bank or building society, a debt charity, or by having an honest conversation with family or friends.”

Start a savings habit

This can be particularly hard when you’re balancing a very tight budget – but if you try saving small amounts often, you may be surprised at how quickly your savings add up.

“Saving up some cash while studying can be difficult because of social and essential spending, so it may be worth getting a part-time job to get some income and using mobile apps like Chip to automatically put aside cash for a rainy day,” says Rachel.

Take a fresh look around

It’s easy to stick with the same current account provider but when you graduate, your circumstances and needs will change again.

The seven-day current account switch service makes switching providers smoother, as payments are automatically swapped over to the new account. A guarantee also means you won’t be left out of pocket if something goes wrong with the switch.