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Common money mistakes (student edition)

Hubert Cheung
Common money mistakes (student edition)

Illustration by Maria Kotyshova

1. Not setting a budget

For a lot of students, this might be your first time having more hands-on control over your finances. You might be moving to another city for uni, paying bills and rent for the first time or paying your own tuition fees. Although keeping track of these expenses may not seem too difficult at first glance, when all of them add up, they can be quite complicated and frustrating to track! And as freshers, there are so many events and new things that you don’t want to miss, it's easy to lose track when you want to experience new things and you might get behind and even accidentally go into overdraft. So setting a budget is a good way to understand your living costs and expenses!

2. Going into your overdraft and ruining your credit score

This will very likely be the first time you have a bank account. It’s very easy to spend too much in a month and risk going into overdraft, falling behind on payments and paying high fees. This can lead to a low credit score, something you wouldn’t have to think about before. Your credit score can impact your ability to take out loans, open bank accounts or even getting a flat. One good way to avoid this is to start a student bank account instead, because they have interest-free overdrafts! It allows you to take out extra money in case of emergencies and won’t have to worry about ruining your credit score! However, the “interest-free” perk isn’t forever, once you graduate, most student bank accounts automatically become graduate bank accounts, and you’ll have to start repaying your debt, find out more about student bank accounts here!

3. Not taking advantage of student discounts 

A lot of uni students may not be aware of just how many discounts and deals they can get! There are various free and paid student discounts and deals service providers, such as UNiDAYS, TOTUM, StudentBeans and ISIC, where you can get thousands of discounts to many big brands. Many businesses also provide discounts to students, such as the British Museum, TFL and National Express. Although a 10% discount may not seem like a lot on its own, when you stack up all these discounts, you end up saving a lot of money! If you’re interested in all the student discounts in the UK, we actually did a complete guide on it, and you can read it here!

4. Falling into Buy-Now-Pay-Later debt

Buy Now Pay Later (BNPL) services are quickly becoming a popular way to purchase. These services, such as Klarna, allow users to buy items and pay for them in the future. However, BNPL services aren’t considered regular loans by credit reference agencies and other lenders. It becomes a kind of invisible debt to the safety net system, so users with lots of little BNPL debts can get into a lot of trouble trying to fulfil those payments while repaying other loans and interest at the same time. According to Citizens Advice, one in 10 users of BNPL services end up being pursued by debt collectors.

5. Not negotiating the salary for your first job

A lot of students aren’t aware of or are too scared to negotiate their salary when getting their first job, but it’s important to remember that you have the right and should definitely do so! It is important that you understand the average salary for someone with your experience level in your specific industry and location. If you wanna know the full strategy for negotiating your first salary, you can check out our guide here!

6. Not saving and not doing anything with your savings

Beyond budgeting, it’s also important to set aside some money for saving. Opening a savings account is one option and allows you to create an emergency fund for times of need! However, a savings account is not the best place to store your extra money because a savings account may have an interest rate of 0.5% but the inflation rate is usually around 2-3%. So not doing anything with your savings is still losing money! once you have  some money in a savings account to access immediately for an emergency, you should consider investing any new savings to make your money work for you!

7. Forgetting bills & recurring payments

We’ve all been there, woke up one morning and saw a notification saying you just got charged £7.99 because you forgot to cancel your Audible subscription after the free trial. All the subscription fees from Netflix, Amazon Prime, Disney+ can add up to a lot of money paid to services you no longer use! Luckily, Quirk’s app tracks all your bills and subscriptions across different accounts and allows you to set up reminders before you get charged for another month. You also get updates on any changes or expiration to your recurring payments!

Final advice

It is never too early to start thinking about money! Money management is like riding a bike, once you start following these tips, they become habits and almost second nature. This will build a good foundation for your future when you start dealing with tax and retirement savings!

Chap riding bike london GIF on GIFER - by Buriath

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