September usually means the end of the holiday season and the time for millions of students to begin their higher education journey.
With colleges reopening around the country, now is the perfect time to plan your finances, for the simple reason that most prospective college students will be handling money for the first time on their own. This could mean paying bills such as for rentals and textbooks, paying your tuition fees and handling budgets generally, which can all be rather overwhelming first time around.
Starting University can be a daunting prospect, especially if you’re leaving home and traveling to study abroad. Moving to a new country and making new friends is no easy feat. For millions, it entails travelling thousands of miles across the world to a foreign culture, marking the start to a new international life. Over 437,000 students a year come to the UK to study from around the world; though most of it is enticing and exciting, adjusting in a new place can be a challenge.
Here are a few important things to consider as you embark on a great adventure of your own:
1. Budget: It would be a difficult to manage a part-time job, a dissertation, fitness and social life without taking into account the small details in terms of planning – similarly your finances, if you want to save, you need a plan of action or you may find yourself treading water. Your plan will help to keep everything in order. It is advisable to track all your expenses with as much diligence as possible, and there are a number of simple apps for your smartphone that are helpful, such as Good Budget, Wally and Mint.
However, in cases whereby this appears challenging, it would be best to keep a fair idea of money flowing in and out. For instance, if you know your expenses for a month (e.g. £500 for rent, £200 for groceries and another £100 for transport), and you know how much you earn through your part-time job (e.g. £1200) you can aim to keep your remaining earnings (about £400 ) in a savings account.
2. Frugality is your dear friend: You will cherish all your cuppa-noodle-evenings when you look back fondly at your old college self sometime in the near future. But this is a luxury you will enjoy, only if you shake the cold hand of frugality at this minute.
Warren Buffet famously advised, “Don't save what is left after spending; spend what is left after saving.”
3. Get the right bank account: Opening a bank account is one of the most important financial steps you will take as you gear up to start University. It’s safe to say that right now, you can steer clear of the tempting loyalty promotions that banks will shower upon a new set of potential customers. However, some freebies might be worth looking at as long as you read their terms and conditions thoroughly.
It is always good to have a general idea of your requirements before you choose the account type. If you think you will need to borrow money, an interest-free overdraft account would perhaps suit you best. It means you can go overdrawn for free, as in there will be no charges for borrowing from your bank, however, you do have to repay the money eventually – and do aim to stay within your limit as there may be hefty charges if not.
If your requirements are limited to local expenses and if you don’t need to borrow much, look into who offers the best deals.
HSBC offers a straight forward £60 voucher for Amazon with every student account, in addition to 0% overdraft offers up to £1200.
Santander has a great deal; they offer a 16-25 Railcard lasting four years. A rail card normally costs £30 a year which makes this offer a great way to save money. The railcard provides students 1/3rd off standard fares anytime across Great Britain.
Furthermore, if your lifestyle requires you to send money overseas often – you can sign-up for any of the above options and simply link it to your Xendpay to save up to 7% on your money transfers, as compared to your bank.
For other exciting offers for students from Xendpay, check the on-going Xendpay Student campaign.
4. Avoid credit when possible: In all likeliness you’d have some student debt as you leave University; therefore adding to that debt is not a good idea. Avoid credit cards, if you don’t absolutely need one. Research thoroughly before you plan to get one. Credit card companies can lure students into deals that turn sour, with hidden charges and super-high interest rates.
Instead of hastily paying your expenses on plastic – work towards establishing a credit history for a better chance of being able to source loans when you will actually need them. Apply for a credit card and don’t use the card but hold on to your account.
On this account, add recurring monthly purchase like an Amazon prime subscription for example. Now set up a direct debit so you never miss a payment. With this easy tactic you are now starting to build a credit history, without putting yourself at high risk.
5. The Envelope system: This system is a great way of delegating your cash in hand on to recurring expenses with the aim of never overshooting your set target of expenditure for the set time. In this system, you use cash for different categories of your budget. Let’s say you’ve budgeted £500 a month for household expenditures. When you receive your first pay cheque of the month, withdraw £250 from the bank and put the cash in an envelope. Label that envelope, as “Food and groceries.” When you receive your second pay cheque, do the same thing again, and put that £250 in the envelope. That makes up for your £500 for the month for food.
No money, under any circumstances, comes out of the envelope except to pay for food at the store. If you go food shopping and leave the envelope at home by mistake, turn around and go grab that envelope. If you take £170 and your total comes to £180, take some things out of the cart. Put any change back in the envelope.
When your money is gone, it’s gone! This system keeps you from over-spending and prevents you from going into avoidable debt. This is a great way to keep yourself accountable for your spending.
The author is Paresh Davdra, CEO & Co-Founder of UK foreign exchange and international payments provider RationalFX and the world’s first “Pay-What-You-Want” money transfer service Xendpay.
Xendpay’s “Pay What You Want”
model, which aims to empower the users of financial services for the common good, has been endorsed by Wikipedia Founder Jimmy Wales and was accepted as a Clinton Global Initiative (CGI) Commitment to Action. Since the introduction of the model in 2015, Xendpay has seen its number of users and transactions increase by twelve fold and has saved its customers over $3.2m (£2.1m) that would otherwise have been lost in uncompetitive or hidden bank fees.
International remittance has a major impact on development globally, especially in the poorest rural communities. Xendpay’s pioneering model supports the worlds’ wider sustainable development agenda including the vision to eradicate global poverty by 2030 by ensuring all payment transfers are not impacted by hidden fees and commissions.