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Managing money at University

When you start university, money can be an overwhelming and confusing situation. Once freshers week is over and the reality of student life begins to set in, it's important to take stock of your financial situation.

Here's some things to remember when starting this new financial journey.

1. Student Overdrafts

These are 0% interest overdrafts for the duration of your studies. However, you should only consider going for an overdraft if you absolutely need one.

Because they are 0% interest it is so easy to forget that this is money which needs to be paid back. Overspending your overdraft can make it very difficult to pay back.

Most student overdrafts come with freebies when opening up an account, so be sure to compare what's on offer. Remember to look which has the best overdraft facility and terms rather than just the best freebie, as student railcards may be useful but they can also be easily purchased seperately. 

Never go over the limit. Just like a normal overdraft, going over the agreed limit means inflated interest rates abd can lead to serious debt.

2. Student Credit Cards

Some banks offer 'student credit cards' with a reduced limit. It's best to avoid these completely, especially as a student with little to no income.

Even thought these are advertised as credit card for students, they have the same reprecussions as standard credit cards, so need to be considered wisely. 

Like normal credit cards, they can encourage bad spending habits especially when you're strapped for cash. It allows you to spend beyond your means and take on voluntary debt.

Debts created through these can often take years to repay. For example, if you borrowed £3,000 on one at the age of 21 and made the minimum monthly repayments, you would be 50 before it is cleared off. 

3. Contracts & Subscriptions

Phone contracts are a substantial commitment often spanning 2 - 3 years, and if you have little to no income as a student it can be difficult to keep up with the monthly payments.

Consider choosing PAYG or a rolling contract so that if money is tight one month you can easily adjust to get some budget relief. 

Subscriptions like Netflix, AmazonPrime and Spotify should be considered a luxury, and if money is tight it's worthwhile considering splitting these with friends or housemates, or alternatively cancelling them altogether until you have a healthy income to manage them.