Kids at uni? Top money tips all parents should pass on
The new-found freedom of moving away from home and heading off to university comes with some big new financial responsibilities for the freshers of 2018. Tuition fees now top £9,000 a year in most cases and that’s before they have paid for a roof over their heads, or bought their first packet of Hobnobs. According to the IFS, the average UK graduate will leave university with an eye-popping debt of over £50,000.
So, here are some top tips to help students to keep control of their finances and equip them for the world beyond those ivory towers…
Get to grips with debt
Given that the maximum cost of living loan available from the government, for someone living away from home in London is just a shade over £11,000 (and many won’t get the maximum as the amount is means tested against their parents’ income), plenty of students will need to borrow. This makes them a classic target for all kinds of lenders who will happily prey on their relative ignorance when it comes to debt.
So, make sure your children understand that overdrafts, personal loans and other unsecured debt do not offer “free money”. Encourage them to talk to their bank and get overdrafts approved and also to talk openly to you about their finances. Above all make sure they understand the perils of borrowing from unregulated payday lenders and their like.
Most students would rather focus on their first student party than their first budget. However, every penny counts while they are studying and understanding where their money goes each week is crucial. If they are sharing accommodation, encourage them to keep a record of everything they spend and agree a system with their fellow lodgers to ensure they only incur their fair share of any communal costs.
Make sure that household utility bills and subscriptions are split so that one person is not responsible for them all. Also talk to them about bulk buying and shopping efficiently – a weekly, or even monthly, trip to a discounter to buy household essentials will save a fortune compared to popping into their local corner shop every other day.
Taking a paid job during the holidays kills two birds with one stone – it stops your children spending whilst they work and it gives them some financial flexibility. Some students are able to supplement any vacation work they get with regular bar, or similar, work whilst at college. The sooner they develop a mindset of having to pay their own way the better, especially if they have been used to calling on the Bank of Mum and Dad before university.
They should also keep an eye out for paid schemes offered by some employers during the summer holidays too – this can be a great way to both earn a bit of money and find out something about the world of work before they get to it.
Develop an eye for detail
Having lived at home whilst at school, many students don’t realise that the quality of their financial lives will be dominated by small print once they hit the real world. Make sure they understand the importance of reading lease agreements, rental contracts and utility deals carefully. In particular they need to be on the look-out for hidden sweeteners, lock-ins and cancellation charges.
Be your own person
The moment they arrive at university, students come under peer pressure to spend money. Other students may simply have more money to burn, or have less but be simply more willing to run up big debts. It is therefore vital that your children find their own comfort level when it comes to spending and are aware that the choices they make now will affect the quality of their lives later.
Encourage them to compete academically or athletically rather than hedonistically and to have the confidence to say “no” rather than living in a constant FOMO (fear of missing out) state.
Tim Bennett is partner & head of education at Killik & Co