If you’re a student, it can be a difficult time when it comes to handling money. Students often have to juggle financial matters with academic concerns, all the while learning the ropes of how to live away from home. While learning to manage money for the first time can be an awkward process of trial-and-error plus dealing with student loans and managing a budget – it’s also a once-in-a-lifetime chance to learn good financial techniques and set yourself up with a solid grounding for life. It’s a learning experience just as important as attending seminars and lectures – good habits learned at university will stay with you for years.
Student Loan Payments
If you have a student loan, that covers things besides tuition, you’ll often receive three payments a year at the start of each term – usually in September, January and April. The day you receive your installment often means a round of celebration with friends, but be careful not to spend it all at once – the money has to last throughout the whole term. It’s important to draw up a realistic budget to ensure you don’t spend it all too quickly.
However, even the best budgeters sometimes run into a shortfall by under-estimating how much they need, or if they’re hit with unexpected expenses. With several months between each loan payment, you can easily run into a situation where you run out of money a few weeks before your next payment is due. On the other hand, if you have been able to splurge and still have money you are probably borrowing too much and may be setting yourself up for a lifetime of debt.
Short-term Student Loans
If you’ve overspent but are committed to financial independence, it might be worth considering a short-term loan until you receive the next installment. Lenders such as Smart-Pig can offer small loans up to £250 over terms of up to 90 days. Unlike other loan providers, Smart-Pig takes into account your income from student loans, so you’re much more likely to be approved. They also offer a safety net that caps the amount of interest you’ll pay, and there’s a grace period just in case the next installment of your student loan is later than expected. But of course you are always better off not borrowing and avoiding the debt habit by planning properly rather than compounding your interest payments.
Drawing Up a Budget
Many families have difficulty budgeting their money for just the next week or two until the next paycheck. Students relying on loans need to budget for 3 months! When preparing a budget as a student, the golden rule for staying out of debt and maintaining a good level of financial stability is to never spend more money than you physically have. When the first installment of your student loan comes in, don’t start spending it straight away – start planning how to spend it.
Ask yourself what that money has to cover over the next three months. Of course, there’s the obvious monthly expenses such as rent and food, but what if you’re planning to go on holiday next year? Set aside some of your loan now and do the same with your next installment, and you’ll find you’ve got plenty of spending money when your holiday rolls around. Likewise, if you have a renewal for car insurance coming up, put some cash aside for that. After you’ve got those pressing expenses out of the way, you can start setting aside money for more fun things. That way, as long as you stay within your allotted budget, you can enjoy a night out without having to worry about paying for that big expense three months down the line.
See Also:
- Understanding New Student Loans
- The Financial Benefits of Student Athletics
- Avoiding Student Loan Debt
- The Quickest Ways to Pay Off Your Student Loan
Resources:
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