Whether you’re just starting university or you’ve had more terms than Barack Obama, keeping hold of your cash is one major challenge! The money experts at Save the Student dismantle some common myths about student banking, and reveal how to make it easy on yourself.
Myth #1: You can only have one bank account
If you want (and are accepted!) you can open current and savings accounts at several banks, or even have multiple accounts with the same provider. Having a second account is a top way to keep your cash in check.
How to work it: Have Student Finance, wages and other regular income paid into your main account, and use it to cover bills, rent and essential direct debits. You then siphon off a monthly or weekly allowance from what’s left to a second account for everyday spending. Managing multiple accounts doesn’t have to a ‘mare, either – sites like Money Dashboard help you keep an eye on your cash wherever you’ve parked it.
Heads-up: Student accounts come with perks – think railcards, discounts, and free overdrafts. Unsurprisingly, some banks won’t look kindly on you signing up for multiple accounts to grab all the goodies. Check the small print, especially for any minimum pay-ins to keep your account active – and don’t be tempted to get extra accounts as a means of borrowing money, as that can quickly go sour.
If you opt for just one account, take the time to get the best one for your needs from the get-go – but still keep an eye out for better deals later on and switch if you need to. Loyalty doesn’t always pay, so it’s up to you to get the best from your banking!
Myth #2: Everyone else stays on budget
Most students have very little cash to live on, and that makes sticking to a limit insanely tricky. Unless you’ve spent a few years living as a monk, going without may not come naturally– but there are tools that can help!
Prepaid cards work just like debit cards: you can use them to pay for goods in shops, online or overseas, withdraw cash, or make contactless payments. The difference is you have to load them up with money first.
How to work it: Move your spending cash to a prepaid card, but only top it up once a week or month. The aim of the game is to make it last between top-ups – a tactic that can make you more selective about your spending. Some cards (including Monzo and Revolut) come with apps that give instant spending alerts, real-time balance checking, plus expenses tracking – so you know exactly what’s gobbling up your cash each month.
Heads-up: Prepaid cards lead the way on cheaper foreign use (withdrawing cash abroad, spending while travelling or paying in other currencies), so there are savings to be had. Spending isn’t protected as it is with credit cards, however – called Section 75 protection – so prepaid may not be your best choice for big-money items.
Myth #3: Saving is impossible
If you struggle to put money aside for back-up or treats, you’ll love auto-saving! As the name implies, it’s a low-effort way to build a decent cash pot on the side.
How to work it: One way is to have your bank account (or a third-party app like Chip) monitor your spending and identify how much you can afford to save. Usually that’s a couple of quid here or there, with the money tucked away into a savings account for you. Alternatively, some banks offer ‘round-up’: every time you make a payment the amount if rounded up to the nearest pound, with the extra pennies going towards your savings pot. Easy!
Heads-up: Third-party money apps are usually ‘read-only’, meaning they can’t run off to Ibiza with your Student Loan – but obviously read the small print! If you struggle to stay in credit, also check your auto-savings will hit snooze before taking you into your overdraft.
The last word
If you want to stay on top of your cash at uni and beyond, digital banking tools like the ones above can help you sort it. Where they’re limited is in magicking up extra income (although keep an eye out for better interest rates on savings, bonuses for opening accounts, and rewards for referring friends!).
If lack of cash is causing you sleepless nights and you’ve tried the obvious – budgeting, employment, family support and an interest-free overdraft – have a word with your student support team sooner rather than later: there may be extra funding you can claim?"
Guest blog written by Ruth Bushi, an editor at Save the Student.