Setting and managing your budget
In Fees, loans and grants we looked at the basics of student finance; tuition fees, student loans, and other sources of funding.
In this article we look at the other side of finance; what will you be spending your money on, and how to manage it.
It’s not an exciting subject, but few matters are as important as finance when it comes to your studies and your wellbeing.
Great budgeting will not bring you happiness, but a lack of money, or the mismanagement of money, can definitely bring misery.
And with the amount of money that you are likely to be living on as a student, this is a major risk.
So… today we talk about financial planning. In particular:
How much money will you need?
How much money will you have?
Making up the shortfall
Managing your money
Before that, a word about parents.
If you are a student reading this, you are heavily reliant on their parents. While you are now taking a step away from them, building your own independence, you are still reliant on them financially; it's just the way that student funding works.
So, work very closely with them on all financial matters. Build an honest and open relationship with them so that you both agree on what you will need, how much support they will be giving you, and what you will be doing to make up any shortfall.
And crucially, gain their trust so that they are confident in your ability to manage your money without their interference.
If you are a parent reading this, you need to do the same. Work closely with your son or daughter to build an honest and open relationship with them about money. Not so that you can control their budget, but so that you can pass on the skills and the confidence for them to do it themselves.
How much money will you need?
This is actually the easy bit; parents and students should work together to outline a living budget.
This is probably most easily done on a monthly basis, though there will be some one-off annual costs (such as equipment). There might also be termly costs, such as transport home.
Just use a spreadsheet, and include the following as a minimum:
Accommodation
Bills
Mobile Phone
Transport
Groceries
Clothes & shopping
Takeaways & eating out
Going out
Holidays & events
Health & wellbeing
Course materials
Gifts & charity
Friends & family
Other
For some of these it may be fairly easy to work out a sensible budget.
For accommodation, the university will have prices on their website (you’ll just need to agree whether to go for the expensive or the cheap option!).
For others things you’ll have to work it out for yourselves; parents and students together!
As you work through the amounts in these, you might find some disagreements arise. That’s OK, it's super-important for you and your parents to work through your expectations together. And you’ll both need to work out which areas you are prepared to compromise on. For example, do you really want to spend your money on the latest iPhone?
For a useful baseline, there is a terrifically useful survey done each year by ‘Save the Student’.
I took the budget list above from the categories in their survey specifically so that you can compare your budget with the average budget.
For the full breakdown, see Student Money Survey 2024 results.
Of course it’s only an average, so your budget might look very different, but to give you an idea, the average student expenditure last year was £1,104 per month.
There is also a massive amount of other invaluable and sobering information contained in the report. Their key findings include:
Average Maintenance Loans fall short of covering living costs by around £504 per month.
Over four in five worry about making ends meet.
67% skip meals at least some of the time, up from 64% in the 2023 survey.
48% have thought about dropping out of university due to money-related issues.
There is a whole lot more in it than this, and I strongly recommend you read it.
You now know that finance is going to be a challenge, so you can take the challenge seriously and meet it head on!
How much money will you have?
This is a slightly more complicated question, as there are so many variables. If you haven’t read Fees, loans and grants, read it now.
hen follow the links at the end to the website that applies to you.
Each of the four countries of the UK has a site that will enable you to find out what you will be entitled to, depending on where you live and study.
Oh yes, and each will depend on what your family income is.
So… parents and students, you are going to have to have another open and honest discussion about what your household income is.
Without knowing this, you won’t be able to tell how much loan (and grant, where applicable) you are going to get.
Once you know how much you will receive in loans and grants, you will be able to start working out how to make up the shortfall.
Making up the shortfall
Parental contribution
Remember, each government has awarded funds to each student on the basis that their parents will fill the gap between what they get, and what you need.
However, no one I know really thinks that the figures are fair and right. It will be a big ask to expect every parent to simply make up the difference for every student. Some locations are more expensive than others, and there is a cost-of-living crisis hitting all but the very highest earners.
So once again, an open and honest conversation will be needed in order to plan exactly what parents will be contributing.
Many parents agree simply to fund accommodation.
The benefit of this is that it is simple, and both sides know where they stand.
The downside is that it doesn’t really take into account that reality of the situation: how the much the student is getting via loans, how much everything costs, nor how much the parents have available.
The other solution is simply to agree to a fixed amount that the parents can commit to. Work it out for the year, and then pay this into the students account in regular instalments (termly/monthly - its up to you).
This will enable the student to take full responsibility for their own budget.
Part-time work
Part-time work could be anything from bar work, shop work (such as supermarket shelf-stacking or retail sales), through to working in your university library.
As a student, I worked in sales at Currys, just one shift a week during term-time, ramping it up over Christmas and Easter, and earning pretty decent money when the commission was added on.
I’m also a big fan of Student Ambassador work; just one campus tour a week, plus three or four Open Days a year can easily put £500 or £600 in your pocket.
And according to the Student Money Survey 2023, over a third of students have their own side-hustle to bringing money. Though a word of caution here; it's not easy to make money on a side hustle, and half of these students made £500 or less.
Summer work
Summertime is, of course, the main time when you can make money, and potentially reduce your expenditure by staying at home. So be sure to keep your eyes wide open for work opportunities in your hometown, and don’t leave it until you are home in June before starting to look.
Managing your money
I’ll finish with some super-quick advice on managing your money. It comes from a brilliant article The London Budget: An international student’s tale, by Judah Purwanto who studied at UCL.
His experience and advice is spot on, both for international students and those from the UK:
“London” he says “can be expensive… like really, really expensive”, so:
Track your expenditure with a spreadsheet.
Get a Monzo Bank Account; it will help you to track expenditure AND you can make use of ‘pots’ to separate out your spending and saving.
Get a part-time job, but don’t sacrifice your academics for it!
Spend a bit, before you spend more.
Don’t be too hard on yourself; set a budget goal and take time to learn how to achieve it.
In summary…
So there you have it! You now know how to work out what you are likely to spend, what you are likely to receive, how to make up the shortfall, and how to manage your money! Basically, you know how to budget, right?
Well, sort of. But really, this is just the start. The hard work really starts here.
So work with your parents or other supporters to prepare each of these areas in detail. But remember that you are only working with them on the preparation in order that you can take the responsibility and ownership of your finances. The more you are able to take responsibility, the easier your life as a student will be.
