Banking For Dummies: A Student Guide To The World Of Finance

Here’s our guide for students to understand the basics of banking and finance.

Banking and taking care of your finances is not the most exciting task for anyone, but as a student it can make your life a whole lot easier and could even earn you extra money.

Here are some of the basics we reckon you should know.

PREPARING A BUDGET

Things like Monzo can really help with maintaining your budget. Learn how much income you have and then plan out how much you spend on average per week/month. This way you can learn which areas are easiest to make savings in. For example, if you tag all your regular coffee places under eating out, you can slowly see just how much you’re spending on that morning latte. It all adds up. Allow for fun expenses like that within your budget, but make sure you stick within your chosen amount to make sure you’re not spending money willy nilly. Other things like groceries, phone bills and rent are going to need to take priority in your budget.

OVERDRAFTS

Overdrafts can be an absolute saviour at uni. However, they don’t last forever. Make sure you pick and overdraft that’s large enough for your needs, but also with a low interest rate. You’ll probably have to pay 0% interest on your overdraft when you’re a student, but after you graduate this will change, so you’ll want to make sure you’ve organised a good rate with your provider.

If you’re already overdrawn and near the edge of your limit, It’s worth seeing if your bank will temporarily give you a larger overdraft limit. The easiest way to do this is either online or in-store. Don’t use that extra money though, just keep it as a padding just in case. If you use more than your limit you will be hit with charges and fees which are not good news for anyone.

SWITCHING BANKS

Switching banks can be surprisingly easy, just speak to the bank you want to change to and see how they can help you move over. Often banks will offer you an intro bonus which can be a tempting reason to change – and yes you can keep bouncing around different banks claiming the money for switching. However, this can negatively affect your credit score which is not a good thing, so if you’re going to switch make sure it doesn’t make you look like you’re unstable with your finances.

CREDIT SCORE

A person’s credit score ranges from 300 to 850, and it basically tells credit providers how trustworthy you are with money. So if you want to apply for a loan in the future or buy a house you can do that as smoothly as possible.

There are several ways you can improve your credit score, but one of the easiest is to get a credit card. Yes, this sounds scary, but if you use it correctly it’s not at all. If you get a credit card with a low limit, spend a very small amount on it each month and then set up an automatic direct debit from your current account to pay off the credit card you’ll start building credit.

SAVINGS ACCOUNT

Yes, although you are a student and money can be tight, if you have the ability to save any amount of money during university it is a good idea. Although we know that for many people, saving money is a luxury that they cannot afford during uni even with a part time job. However, if you can afford to put away £5 out of your budget a week, you’ll have saved £260 by the end of the year. If you can’t afford that one week don’t worry, as long as you’re actively trying to budget and save you’re doing good.