Taking a student loan can be exciting a dejecting at the same time. You’re excited that you suddenly have a lot of money to spend in the next few years, but you’re also afraid of the consequences it’ll have later in your life.
While your brain starts imagining the holidays you’ll go on, and the things you’ll buy, you need to knock yourself back into making sure you don’t blow your loan all in one go. Here are 6 tips to help you manage your student loan.
1. Know your loan down to the T
It’s been found that more than 50% of students don’t know the principal amount and the interest rate of their loans. Naturally, they also don’t know how much they’ll have to repay after graduation. You may also not know that student finances usually consist of tuition-fee loan, maintenance loan, and some top-up loans or grants on top.
You might hold off on knowing about your loan details until later since you need to at least £25,000 before starting repayment. But it’s important that you’re aware of it beforehand so that when the time comes to repay, you’re prepared. Thus, note down the exact amount you’ve borrowed, calculate the interest rates, and figure out the full amount you’ll need to pay when the time comes.
2. Start budgeting
Managing your money can be hard, especially later on in your life when there are a lot of commitments to keep track of. This is why it can be really helpful if you develop a budgeting habit right from college. First things first — do not spend all your money in freshers’ week. After a month or two, try to work out exactly how much money you’ll need for each month to manage your student loan effectively.
You can keep it simple and set a reasonable amount aside for essentials like food, books, and rent. Or you can also follow a budgeting method like the envelope budgeting method. Learn to not cross the budget and manage your finances when you face emergencies.
You could also try to hunt for affordable ways to buy clothes, books, and food with your friends. Once you’ve created your budget, use it on a week-to-week basis. Withdraw your cash allowance each week and use it get through the entire week.
3. Banking done right
A big decision you’ll need to make early on is which bank to open your student account with. The biggest factor while comparing student accounts is the way you intend to spend your interest-free overdraft.
Many banks will try to sway you away with a load of tempting freebies, but keep your focus on finding the biggest interest-free overdraft that stays interest-free for a long time even after you graduate. Also, credit cards and unauthorized overdrafts are a strict no-no.
4. Taking advantage of student shopping benefits
You may or may not already know that students get a bunch of shopping benefits. Companies and brands offer a range of benefits for students to help them get their things at a slashed price. So keep an eye out for special offers, voucher codes, and student discounts at your favourite retailers.
You can also get a ton of travel discounts as a student. You can apply for travel cards or sign up for shopping cards that discount your purchases in retailers including fashion, drink, food, fitness, entertainment, and restaurants.
5. Get a side hustle
The best way to make the most out of your money is to, well, make more money. Many students get a job while they’re studying to get some more pocket money. You may be able to find work in your university’s job shop or employment service. Also, inquire your students’ union about jobs in its shops or bars.
6. Cut down
Earlier, we gave a few tips about budgeting. But what will you do if you overspend? That’s when you need to start looking for alternative ways to cut costs. Find out which taxes you’re exempt from as a student. Whatever you buy for your room, share it with your roommates — laundry, food, and books. Also, learn how to cook simple meals to avoid relying on the canteen all the time. These can all help manage your student loan.