It’s that time of year again when young people are at a crossroads: choosing to go to university, starting an apprenticeship or going straight into work. Regardless of the route they take, it’s often a time when they will have more financial responsibilities than ever before. With the IFS finding that students going to university could leave with more than £50,000 or student debt, budgeting and saving where possible is more important for students than ever before. There’s no ‘quick fix’ to handling bills and fees, but to help, Zurich UK’s Head of Consumer Distribution, Chris Atkinson, shares his top tips on how best to help your son or daughter manage their finances as a student.
Chris Atkinson, Head of Consumer Distribution at Zurich, said: “Mounting financial pressure is taking its toll on students. In addition to expensive tuition fees, sky-high rent and general living costs are stretching monthly incomes to breaking point and for someone just starting out, making monthly income go far can seem like a huge challenge. In fact, strained finances are preventing two fifths of students from fulfilling their aspirations today.”
With a third of students admitting that a lack of understanding of how to even begin saving is holding them back from doing this effectively, we put together a list of tips to get started.
1. Get saving now
University is now more expensive than ever before, so it’s never been so important to get saving as early as possible. Depending on your own financial situation, try putting a certain amount of money into a savings account every month. One of the best ways to save is a Junior ISA, in which you can save £4,128 a year tax free, or a stocks and shares ISA, which allows you to put away £20,000 a year. It may also be good to encourage your child to save as much of this as they can, the closer they get to university age. This will also help them to prepare for when are having to deal with rent and bills independently for often the first time.
2. Stay on top of student finance deadlines
Applying for student finance isn’t an easy job. There are lots of forms to fill in and they also require a lot of documentation including bank account details, proof of income, ID and proof of address. There are also a fair few deadlines throughout the year to be aware of. To make sure your child gets the correct amount in student loans and on-time, make sure you encourage them to keep on top of all relevant deadlines.
3. Make sure you’re aware of the new student loan guidelines
The student loan system changed for new undergraduates who started in or after September 2012. For most students, the amount they receive in student loans depends on their parents’ income. Essentially, the more money you have, the less they’ll get. The new changes mean that as parents you are expected to contribute. Review your finances and have a conversation with your child to discuss your plan and what you’re able to help them pay for.
4. Shop around for the best bank account
When your child goes off to university they’ll need to open a new student bank account. University is a time when all the major banks launch new offers to attract new students. With most banks having competitive deals, you shouldn’t be afraid to ask exactly what your child will get. For example, NatWest is currently offing a coach travel card for four years, while Santander is offering a four year 16-25 railcard. Remember to help your child to avoid the temptation of signing up to a poor account just because of a freebie!
5. Have a budgeting session
While moving out and going to university will be exciting for your child, it can also be a scary experience, especially when they have to look after themselves financially. Help them by sitting down and going through their incomings and outgoings. Creating a budget sheet and a calendar tracking when bills have to be paid by and the amounts, it’ll ensure your child is on top of their finances from the get go.
6. Planning on working? Make sure you let HMRC know
If your child works during term time or over the summer, then they need to make sure they’re paying the right amount of tax. There’s a lot of misconception as to whether students pay tax, and the reality is they do. Students are taxed just like anyone else, however if they earn less than £11,500 a year, they shouldn’t pay anything. Encouraging your children to notify HMRC from the beginning will help to ensure they’re not caught out further down the line.