Bank accounts and Personal Finance
What bank accounts should I have?
It’s a good idea to think about having more than just one account. I kept the current account I'd always had but opened up another student account. My student loan and money from my parents came into my current account and I paid all my bills and day to day costs (food, travel etc) out of it. When I got a part time job I put the money I earned into my new student account. I then used this account for all the extras, any clothes, nights out, and random indulgences. This not only had the effect of allowing me to keep track of what I spent on what, and therefore begin budgeting, but also allowed me to not feel guilty about spending on a night out when I wanted to. If you have any savings from before university and are able to put them aside, put them into the highest interest rate isa or savings account you can find. Rates are low at the minute but when they improve you’ll be surprised how much the interest adds up. Shop around for the best account, the banks are having to compete for your custom so there are some great deals.
Should I have an overdraft and should I have a credit card?
The most important thing to bear in mind is that both of these financial services are for those who are disciplined.
Investigate the best bank to go with for your student account. They will all be vying to be your choice so you can get some really great deals. Most would say that you should go for the one that offers the biggest overdraft with 0% interest, but think carefully about this as you can land in even more unnecessary debt. Don’t overborrow. If you’re careful and can get by on your student loan you won't need to rack up an enormous overdraft. If you really can't get by without an overdraft shop around and find the deal that's best for you. For example you may be better suited to one that gives you access to money gradually rather in one great whack (dangerous).
As for credit cards, WARNING!!! This is not for shopoholics or those who would admit they have difficulty looking after their finances. My father was keen for me to have one for emergencies and so he signed as my guarantor. Having the card gave me security but because I paid the outstanding amounts on time it also allowed me to establish a good payment history and therefore a good credit rating. I set up a minimum payment facility in case I ever forgot to pay in time; I used the card only for small vital payments and I use it in the same way now. It gave me a introduction to being responsible with short term borrowing and has only done me good. There are of course horror stories. I have friends who ran up huge debts resulting in chopped up, hidden, and frozen cards (yes, frozen).
Do not, under any circumstances take out a store card. There's just no good reason for a student to have one. The stores know they can draw students in with discount on application, but hit them later with astronomical interest rates. Do however apply for loyalty cards as you will receive discounts and special deals. Read the small print and make sure you know what you’re signing up to.
Will I have to pay a deposit?
You will each have to pay a deposit when you move into rented accommodation. In Halls this is relatively hassle free as you are only responsible for your room. However in private rented accommodation there will be communal areas too. It’s worth having a discussion with your housemates when you first move in about your deposit. Agree that everyone is responsible for damage in their own bedrooms and jointly responsible for general wear and tear in the communal areas. Agree that if there is any excessive damage that only one person is responsible for eg. an iron burn on the carpet, wine stain on the sofa, that should come out of that person's deposit. This should avoid bitter arguments when you move out.
What household bills can I expect to pay in halls of residence?
Most halls of residence include the cost of electricity and water in the rent. However you will probably be expected to pay for your TV licence and laundry costs. If you think the washing machine and tumble drier costs are steep at your halls then search out a local launderette. I found one down the road to be half the price but halls of residence bank on students being too lazy to shop around.
Expect to be charged if you don’t do your cleaning or set off the fire alarm. The fire engine was called repeatedly to my halls for cases of burnt toast and the perpetrators were charged £50 a time.
Cleaning rotas are common and are often set up by the halls staff themselves. The flat I shared with three other strangers were checked every week. If someone was found not to have done their cleaning or not to have done it to an acceptable standard, they were warned and had to do it by the next day. If it happened repeatedly or wasn’t done at all then the money was taken out of their deposit.
What bills can I expect to pay in rented accommodation with friends and what’s the best way to pay them?
There are more than you think:
• TV licence
• Water bills
• House phone
Generally it’s a good idea to pay the bills by direct debit as it works out cheaper over a period of time. You’ll find that very few internet providers will do it any other way and will often insist upon a year’s contract. Your TV licence works out cheaper if you pay it by direct debit, especially in quarterly instalments as you can cancel it. This is useful when you consider that the academic year is only generally 9 months long so you can cancel before the last instalment, saving around £40.
Paying the bills as they come in - and splitting them between housemates - is perhaps easier in the short term but works out more expensive. It can also lead to arguments as one person might have to pay the lump sum and collect everyone else’s share. This is sometimes tough among a bunch of skint students. Some people decide to take one utility each and chase each other up for their share.
Alternatively look at the service offered by www.glide.uk.com. I stumbled upon this website recently and didn’t use it as a student but what it seems to offer is hassle free payments for all the bills for each individual housemate. You enter your postcode, number of people living in the house, and what utilities you require. You then choose between packages according to internet speed etc, but the idea is that they search for the best deal for you. They then give each housemate a fixed monthly price. It sounds like quite a good idea, no housemates chasing each other up to pay, and everyone responsible for their own payment. I can’t recommend it however as I haven’t used it If you do decide to give it a try please let us know what you think of the service.
Should I open a joint account with the people I live with?
This is a tricky one. It can be very convenient if it works but it can be disastrous as I found out. If you want to pay all your bills by direct debit and save money someone’s bank account has to be used. But to share the responsibility a joint account can be set up where all the bills are paid from. All the housemates then put the same amount of money into the account per month.
Set a joint account up by going to the bank together and talking to an advisor. Make sure that no one person can take money out of the account without the other people’s permission and that all bank statements are sent to all the account holders.
I would say you have to trust whoever you do this with but, after having a difficult experience myself, it’s also important to think about that person’s track record with money. I know that sounds harsh but just because someone is a good friend, and can be trusted with your secrets, doesn’t mean they can be trusted with money.
What if my housemates don’t pay?
When it comes to rent it’s likely that you have all signed for equal responsibility in your contract, and as you aren’t in full time employment and have little or no credit rating, your parents will probably have to sign as guarantors. This means that if one of your housemates doesn’t pay their rent one month all the parents will get a letter from the letting agent or landlord. This will probably freak them out so it’s important to live with people based on how financially reliable they are rather than on how nice they are. I've done the latter and it was a mess.
Unfortunately when it comes to bills you may end up having to hassle whoever hasn’t paid. There’s really no other way around it.
Part time jobs
Should I be paying tax on a part time job?
If you earn enough over a tax year you have to pay tax but as student you probably won't. If your course is demanding you won’t be doing a huge number of hours and are therefore unlikley to earn enough to become a tapayer. Between April 2010 and April 2011 you can have an income of £6,475 in earnings and interest on savings before you have to pay any tax.
If you only work in the holidays your employer should give you a P38 form to fill in. That means that no tax will be deducted by your boss through the PAYE scheme (pay as you earn). If you eventually do earn more than the £6,475 limit (unlikely) you'll have to pay up later. If you work through term time and holidays your employer should be able to help you to make sure you don’t pay too much tax.
Should I work for my university?
Working for the university for open days or by doing administration work is a great way to make new friends, fit into the area, and is an amazing addition to your CV. It’s also great because your university is unlikely to pressure you to do more hours than you’re able to and the hours are generally short and casual.
Should I share supermarket bills with the people I live with?
If this works for you the benefits are obvious. You can save a lot of money by sharing the cost of ingredients and cooking together. In reality this very rarely works out. Students living together have busy and changeable lives and resentment can build if someone misses out on meals or communal ingredients are used for an individual meal. It sounds petty but believe me when I say some of the worst arguments I remember at uni were over things missing from the fridge.
It can be a huge issue for even the most generous person if food goes missing repeatedly.
A good idea is to share the cost of basic items like milk, bread, butter, toilet rolls and cleaning products, or take turns buying them like my housemates and I did. We also took turns buying food and cooking for each other which was far easier than splitting the bills at the supermarket.
Should I have a car at university?
Generally most students don’t have a car at university due to the ease and affordability of public transport and extra responsibility and expense of having a car. It can be expensive to park (especially in London) and you may find your insurance is hiked up by a change of address on the policy. Also there’s the added pressure that when people know you have a car you get a lot of requests for lifts. You can combat this like my friend did by keeping a cup in the car for petrol money and asking each person for a pound for a lift. It might sound tight but if you’re the only one with a car paying for the petrol by yourself every few weeks can get a bit wearing. I loved having my car for the supermarket trips though.
Also you might want to consider car sharing if you're at university with someone you've known for a long time. Some universities are setting up student car clubs which are very reasonable and environmentally friendly. Check and see if your university offers this service.
What can I expect to pay for on campus?
You'll have to pay for lunch for starters but most cafeterias are reasonable. The library has hidden costs. Expect to have to pay for photocopying, printing, and laminating. Late fees for borrowed books can be huge! I once stood at the counter behind a guy who had a £200 bill. If you can't get a book back in time due to an emergency, write to or ring your library and explain. They will probably waive the charge if you can prove to them you had no way to get it back to then in time. If you’re in the wrong and do owe them the money don’t ignore the bill. It mounts up and if you don’t pay it they can refuse to give you your degree. Serious.
Your course will also have a reading list, and you may find that you use a book all through a year. In this case it’s a good idea to buy one for yourself. You avoid fees and can write in the margins.
Universities also rarely provide parking so if you’re driving your car to campus expect to pay the local council’s rate for parking.
WARNING! to art and fashion students: Your courses are some of the most expensive you can take at university and I will write a full blog about it at some point. Art students should expect to pay a studio levy at the beginning of each academic year of around £100. Fashion students have to fund their final collection. This can cost as much as £10,000 on top of your fees and living costs.
What discount am I entitled to?
As a student you'll find you're entitled to all sorts of discounts on everything from Topshop clothes to cinema tickets. Some of them are very generous. You’ll realise this as soon as you’re a graduate and it disappears. Ironically you’ll probably feel like you need it more as a graduate as you will have more responsibilities and a student loan to pay back. I was certainly better off when I was a student than I am now as a graduate. Hopefully that will change soon!
It’s a good idea to ask everywhere if there is a student price as some places don’t advertise. If you have an NUS Extra card more places will offer you discounts but you do have to pay for the card. It costs around £10 a year which isn’t a huge amount and is well worth it because some places that say they offer student discounts insist on seeing it. I managed to get through university without one as all the discounts I wanted were from stores that accepted my student ID card (Topshop and other highstreet stores, the cinema, galleries). Check out the details on http://www.nus.org.uk/en/NUS-Extra/
It’s also worth getting a Young Person’s railcard. http://www.16-25railcard.co.uk/
I managed to get one for free for opening a student account with Natwest. Sadly that doesn't happen now but given the amount of money it saved me I would say it's worth paying the £26 a year it costs now. You save a third on train travel and in London they are very useful as you get an offpeak travelcard for all the zones for a fiver!
Apple also offers a great discount for students http://store.apple.com/uk/browse/home/education_routing
Trawl the internet too. There are sites that offer vouchers in high street stores and restaurants. If you’re a fan of a particular shop or restaurant and sign up for their mailing list or loyalty card (not store card, do ask!) you will get special discounts and the first word on events.