Managing your Student Bank Account

When you open your student bank account and pay in your money, for a few minutes you will feel rich.

Then term will start and you will quickly see the money disappear.

The temptation for most students is to splurge whilst they are in the black (new clothes, lots of music download, meals out etc) and then have to live on debt for the rest of the year, this is not good.

Therefore one simple step you should take straight away which may be unheard of for a student is to set up a savings account too, and move as much as the money from the current account to there.

This is not so much because you intend to save but for the psychology of hiding away the money you have, whilst you have it from your grant, so that it is not burning a hole in your current account - checking the cash machine on day one at university before the bills kick in and seeing over £1,000 in your account leads to spending disaster and then a year of pain living off cheesy beans.

So, put as much of the money as you can into the savings account and drip feed across during the term as you need more money, so that you never have too much in the current account and therefore are never tempted to withdraw too much under the illusion of riches.

The second key tip is to remember that the overdraft facility that most student accounts have is a privilege and not an entitlement. Essentially this is a flowery way of saying that you should try your best not to need it!

A balance of -£2,000 even if you are allowed it without interest still means that you have to pay them back £2,000 and so don't see it as free money, it really is negative money. And being in debt above and beyond your student loan is not something that you should particularly aspire too.

So, only use your overdraft if you must. Set up a savings account. Do some budgeting (read the article on that in this section) to work out what your fixed costs are so that you know with certainty how much money you can spend without having to endure a lifetime (or few years) of hurt post graduation paying off those spiralling debts, particularly when interest kicks in on your overdraft!

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