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As many are starting life at university this week, new research warns that students could run out of money by Christmas if they're not careful. The study by Save the Student found that students can count on average living costs of £770 per month, and their maintenance loans are likely not enough to cover this.
The average of £770 consists of £406 in rent, £108 in food costs per month, £64 set aside for socialising, £47 for travel, £37 for bills and the rest going to clothes, books, mobile phone contracts and other expenses. In contrast, the average maintenance loan instalment stands at £600 per month (outside of London), which leaves students with £170 they'll have to come up with on their own.
Many students will look to their parents for support, but Save the Student found that the average parental contribution sits at £138.50 per month – still not enough for the average student. This also doesn't help those students whose parents can't afford to give financial support.
To make matters worse, many will have higher costs at the start of the year, as this is when universities often require students to purchase expensive books and supplies – one student commented they had to pay £350 for books alone – which could result in students spending too much at the start of the term and having nothing left by Christmas. As a result, it's not surprising that 78% of students worry about making ends meet, with 46% saying this affects their mental health.
"Every year we come across far too many students considering dropping out after Christmas simply because they've run out of money to live," Jake Butler, Save the Student's money expert, said. "Most 18-year-olds have never seen four-figure sums sitting in their bank account, so it's vital they understand the money has to last them the full term. Setting a realistic budget (and sticking to it) is a must, and ... if a student finds themselves in hardship, they should first speak to their university about special funding and support."
Another helpful suggestion is to put the student loan money in an easy access savings account, and then take out only what is necessary at the start of each week or month. This way, students would still be able to gain a little extra in interest every year (or every month, if they find a suitable savings account that pays interest monthly).
Don't forget to find a good student bank account either, as this can give you advantages such as interest-free overdrafts (allowing you to borrow money that you won't have to pay back for a while) and even free travel cards to help keep costs down. Save the Student further suggests making the most of free taster sessions before committing money to any society or sport and rushing to the library to borrow your necessary course books to see if you'll really need to buy them – and then hopefully being able to find cheaper used copies later on.
Those that want to make sure they stick to their budget could use a prepaid card loaded with only as much as they're allowed to spend. Indeed, parents or grandparents worried about their (grand)child running out of money during their university career could set up a suitable prepaid card for them. Grandparents who want to help but don't have the funds in their pockets could even consider using equity release to provide financial aid from their mortgage-free home.
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