As a new student you’ll find yourself bombarded with offers of loans and credit cards, even though we’re in the middle of a credit crisis. You’ll probably find yourself very tempted to spend all of it too! However, try to remember that statistically, in addition to your government student loans, by the time you’re sitting your finals, you may owe around £8000 on your credit cards. If the interest on the cards is an average of 17-18%, you could be in your late thirties before you’ve paid it all off.
It’s way too easy to squander your student loan and to run up big bills on your credit cards on buying things that just make life a bit more fun; DVDs, games consoles, even just ordering takeaway and pizza, but if you do that, where are you going to get money from when you need books or to pay for your accommodation? Chances are, you may end up using your credit cards to pay for those vital things and with interest, you’ll pay a lot more for that pizza or curry than if you’d budgeted for entertainment expenses out of your grants or student loans.
You might also end up damaging your credit history long-term because if you continually max out your cards and then get new ones, your credit history may indicate that you’re a compulsive spender who’s probably going to run into difficulties making the repayments. So when getting credit really matters, such as for your first house or car, you may not find it very easy to convince anyone to lend money to you.
Not making a budget – and sticking to it – is one of the biggest mistakes you can make, so from the very start of the new term, make a list of how much money you have available from grants, student loans and your job if you have one, and then make another list of everything you have to pay out weekly and monthly. Be sure to budget for food and entertainment; there’s no point ignoring the cost of going out so allow for it in your budget. If you allow yourself a certain amount each week – and don’t overspend – then there’s no reason why you can’t get through uni with only minimal credit card spending.