Depending on where you are in the world, you’ll be aware that there are several different ways in which students receive their loans.
In the U.K., the vast majority of students receive either a loan or a grant and a loan from the government which they can use for living expenses. This is issued in three lump sums each year, which means that budgeting is slightly different to living on the typical monthly income.
Some students will of course top-up their maintenance loans with part-time work for example, working in retail or bars, but this is usually only enough to cover nights out and other entertainment expenses.
When thinking about borrowing and getting student loans, make sure you have a plan for making your money last.
The key to ensuring this money lasts is to budget well, and split things up monthly, as if you really were receiving a regular income. There’s no avoiding the fact that it is harder to budget for four months of living expenses than just a single one, but it has to be done if you want to avoid being completely skint as your next pay date approaches.
Help with Budgeting
There are many budgeting tools available on the Internet for you to use, and it’s simply a matter of entering how much you get every four months, and then working out what your outgoings will be each and every month.
It’s essential that you are cautious; always put in your maximum amounts just in case, and try to plan for unexpected costs that you might face. You don’t know exactly what they’ll be, but you can certainly set them aside as a contingency plan. The Internet is also useful for finding out what other students spend each month on things like food, travel, utilities, and going out. It’s important to be realistic with how much things cost when sticking to a budget.
Once you’ve worked everything out, you need a way of ensuring you don’t touch the money that’s allocated to you in future months.
It can be all too tempting to spend next month’s money and tell yourself you’ll just have a month where you don’t go out or buy new clothes. This almost always ends badly, so you either need the self control not to spend, or you should keep the bulk of your money in a savings account that you can easily withdraw from.
In extreme cases, some students even give their parents or a money-savvy friend the cash to look after.
Need Help or Advice?
If you do get yourself into a mess, or if you run into something completely unexpected, then there are options available to you. Universities often have a dedicated finance team that can sometimes lend money to those in need, but there are also specialist loan companies that can help give students an advance on their next maintenance installment. Smart-Pig is one such example.
The important thing to remember, then, is that you must budget and remember exactly how long your money has to last. If you make a plan and stick to it by not living beyond your means, you can’t go wrong.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.