Belfast Telegraph

Money matters: Living within a budget is first skill of university learning

By Rob Griffin

Thousands of youngsters will be heading off to university in the next few weeks but one of the most important lessons can be learned before they leave home: how to budget effectively and steer clear of unnecessary debt.

Gloomy research suggests that 18-year-olds celebrating their A-level results a few weeks ago will be graduating in three years owing thousands of pounds for the costs of tuition fees and basic living – even if they haven't been out partying every night.

Geoff Penrice, a financial adviser with Astute Financial Management, warns that the costs involved are more than people expect and it's very easy to overspend and end up in long-term financial difficulty. "Students need to work out how much they have to spend and then budget accordingly," he says.

"There is something very powerful about writing a budget plan down, while keeping a daily written record of expenditure really helps focus the mind."

We spoke to leading financial advisers and companies to put together a list of factors for both students and their parents to consider.

Statistics show that many of us have an unhealthy relationship with debt and rely on our credit cards and bank loans to fund our lives. Owing thousands of pounds at the very start of your working life, therefore, is best avoided.

The best way to limit this, simplistic as it might sound, is to keep an accurate tab on how much money you've got coming in and going out.

The high street banks have all launched their student bank account offerings for 2014 and there are several worth considering, according to Rachel Springall, a student finance specialist at the comparison site moneyfacts.co.uk.

Insurance is a necessary evil. It's the one purchase you make in the hope you'll never need it. It's also tempting to overlook it entirely, but you need – at the very least – to be aware of the risks. This is particularly relevant given the number of expensive electronic items that students will have as standard. In fact, the average value of gadgets owned is £2,883, according to the Endsleigh 2014 Student Survey.

The chances are that even with careful budgeting, there will be a huge disparity between a student's "income" and their outgoings. In this case, the only viable solution is to find a source of cash, says Ms Milkins. "Having a part-time job or working during holidays is an option. Universities often have a 'job shop' or offer opportunities to work for a few days or at certain events. For example, the Millennium Stadium in Cardiff has employed students on an ad hoc basis to help at some matches."

While it may be too late to reduce the burden for those about to start university in the next few weeks, it's never too early for parents of younger children to plan ahead.

Fidelity Personal Investing suggests that saving into a junior Isa is a good way of spreading the cost of university across the first 18 years of your child's life.

Fidelity calculates that for a one-year-old child, an investment of £100 a month could provide the estimated £27,000 to cover the cost of university, with a bit left over.

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