The last thing you want to worry about as a student is managing your finances. Between partying, maybe working a part-time job, meeting with friends, campaigning for [enter latest cause celebre here], and, er.. studying, you have precious little time for things like budgeting and comparing credit options.
It's like this: students typically have very limited financial resources over a protracted period of time. Thus, students should make a particular effort to ensure that they box clever with regard to their credit and expenditure.
An integral part of your financial strategy should be examining your credit card options, and choosing the one which works best for you.
1. Prepare a Budget
The most obvious one of all, and the single best way to save a few quid. You have a certain amount of money that you can spend. Certain things are absolutely essential, and will consume financial resources.
Whatever's left... that's what you've got for pocket money. And that's all you've got.
The most difficult thing about budgeting is the simple act of sitting down for twenty minutes, and going through things with a pen and a piece of paper. Some people hate this process. Others find it ok. But it's not really anyone's idea of a good time.
Stick with it, though, and after a few weeks you will realise that it's time well spent.
Once you begin to write down your outgoings, and are completely honest about things, you will begin to eradicate stupid spending errors. Buying your food in the wrong supermarket is a common one, or buying cup after cup of coffee in the cafe. The couple of extra pounds you spend seems like a small thing at the time, but added together, you will soon see exactly how much silly things like these consume.
When it comes to the budget, always allow for the unexpected. There will always be something or other which you either overlooked, or could not foresee. An extra trip home for your nephew's birthday, a night out to celebrate a friend passing her driving test... whatever. Your budgeted weekly outgoings should always be lower than your income.
Do a budget once, and think of it this way: it takes up no more than half an hour of your week. Now how much money did it save? Did it save you more than you would have made, had you spent the half-hour in paid labour? Now you tell me whether the process was worth it.
2. Get a Debit Card
It is inevitable that most students will leave their studies under the burden of considerable debt. Don't add to your woes by getting into heavy credit card debt. If you don't trust yourself with a credit card, and suspect you might get carried away, it's probably better to get a debit card.
Debit cards offer most of the functionality of credit cards, without any of the pitfalls of getting into debt. The Virgin prepaid card is a functional MasterCard, which is accepted anywhere that takes MasterCard. You buy the card online for £9.95 and then just pay a 2.95% fee when you use it. Load it up with credit as you need it, and away you go.
The Extreme Cred Prepay card costs £8.95 when you sign up, and charges no monthly fee or any fee when you use it (except for ATM withdrawals which cost £1.00). It is backed by Maestro, though, which is not universally accepted by retailers (particularly on the Internet).
3. Use Cards With a Low Credit Limit
Pay-as-you-go are not ideal for those situations where you absolutely have to get your hands on a few quid, but where the well has temporarily run dry.
At least with a low limit credit card, you will not get into any serious debt.
The RBS Student credit cardg(1054877)a(891318)) is one of a number of student cards which offer low credit limits, in this case £500. No-one is going to get into too much trouble with a ceiling like that, and the extra credit will undoubtedly come in handy at some stage. Emergencies do happen, after all.
Two other points to note, regarding student credit cards and credit history.
Firstly, they often have a higher level of interest than other credit cards (as most students have yet to build up a good credit history). But getting one will give you a chance to rack up some good credit history, which will prove invaluable in years to come. So long as you use your student credit card wisely...
4. Use a summer job to pay off debts.
Work part-time if you can: it's the best thing you can do to keep your finances in check. If your course is too intensive to allow part time work, then use the money you can earn in the summer to claw back some of the equity you have been burning away during the year.
Leveraging is the name of the game here. If you look at your summer as a potential window to clear away any debts and to save some money for the cold, hungry winter ahead, you'll be ahead of the game.
Everyone needs a holiday, granted. But unless you are getting serious financial backing from home, or wherever, a couple of months' wages will go a long way during the cold, hungry winter.
5. Use student discounts, and look out for special offers.
Companies just love throwing discounts at students, and credit card companies are no different. Keep your eyes open with regard to what you are entitled to, and what offers are out there.
Natwest's student credit cardg(739709)a(891318)) , for instance, offers numerous discounts for students on various products.
At the time of writing, these include free gifts from the Natwest Wine Club (!), 15% off at KitBag, and 20% off in O'Neill stores.
Barclay's Graduate credit card currently throws in a free flight to a European destination of your choice, as well as a moderate credit limit and 0% interest for nine months. The Barclay Graduate card is for graduates or those who are coming towards the end of their studies.
Such offers should never be your prime motivation in choosing one credit card, or any other financial service, over another. But if other factors are equal, it's certainly a nice bonus.
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