Financial Preparedness
Ask any student what is the hardest part of being a student and they will often tell you that it is having no money. Undertaking tertiary studies often limits your ability to earn substantial sums of money and therefore students tend live on small, fixed incomes.
For school leavers, undertaking tertiary studies also means they are often out of home for the first time. This can lead to financial difficulties if students do not pay attention to the realities of income and expenses. It is important to understand the necessity of budgeting on a small income so that necessary costs are met.
The Australian Governments MoneySmart website has some really valuable budgeting tools including the free TrackMySpend App.
What can I learn?
Right now we are covering:
- The essentials of starting university (student bank accounts, renting, food shopping, etc.)
- How to budget like a pro.
- The best ways to start saving money.
- How to stay out of debt, and what to do if you get into it.
- Risk management (credit cards, payday loans, gambling.)
- Practical, achievable money-saving tips in a 21-Day Money Bootcamp.
- Investing
Government assistance
Money traps - don't get caught!
Being short on money can often force people to take desperate action. However, many options of quick and easy finance can often end up being more expensive in the end and can land you into some serious financial trouble.
These are some of the things that people can be trapped into... Beware of:
High-interest credit cards
Credit Cards can be very dangerous to have if you are on a tight budget as it can be extremely easy to charge money to them but hard to pay off the owing balance. The best thing to do as a student is not to own a credit card at all. However, if you find that it becomes a necessity for you to own one, here are a few steps you should follow:
- Always take note of your interest-free period (if you have one) and make sure that you pay off your debt in that time.
- Don't be fooled into thinking that paying the minimum monthly repayments won't incite interest on your card after the interest-free period has ended.
- Resist the urge to spend more than you can afford. Create a monthly budget to follow.
- Never take the bank up on increasing your credit limit. A $1000 limit is enough as you only want to use it for emergencies.
- Don't take out other credit cards to pay off outstanding credit cards. That is the first sign of serious financial trouble
Bank charges
We all know that banks make their money by charging us for the use of their services -it's their business. However, as you only have limited funds you want to make sure that most of your money stays in your pocket.
As a student, you will find that several banks will actually have accounts tailored to students that do not incur large monthly account fees and charges. However, standard charges will still be applied if you use certain services. Be aware of how many transactions you are allowed to have on your card before you start getting charged a standard fee. Banks will also charge for over-the-counter transactions, using the teller machines of other banks and asking for statements.
Be aware of what your bank offers you in free services and over time you will be able to save yourself cash!
Mobile phones
Mobile phones are highly popular items and there are not many people who don't own one nowadays. It is recommended that you buy a mobile outright and get pre-paid credit on your phone. This way, you will not have the uncertainty of knowing whether you will be able to pay off your next instalment on your phone.
Contracts on mobile phones normally bind a person to a contract for a minimum of two years and if you wish to break out of this contract or cannot afford the repayments you are required to pay out the remaining money owed for the phone, which is often several hundred dollars.
Be certain when buying a mobile phone that you are fully aware of all costs associated with the phone and whether it fits in with your budget restrictions.
Rent-to-own plans
It can be quite tempting to undertake a rent-to-own plan. However, these plans can actually cost you four times more than paying for the item outright. Also, missing or being late with any of your payments can result in the rental store knocking at your door and taking the rental item as well as all the money you have paid off.
Purchases with interest-free periods
Interest-Free Periods on buying some items can be a great way of finally getting some much-needed furniture or appliances. However, there are some tips you should follow before getting into a plan like this.
Calculate your repayments by dividing the cost of the purchase by the number of months that you will get interest-free - you will find that this is more than the minimum repayment amount. The minimum repayments you are required to pay will actually go outside of the interest-free period and you will start to get charged heavy interest.
You should also add about $5 for every month of the interest-free period for account charges as well. Once you have undertaken all your calculations decide whether you will be able to make the payments within your budget. If the answer is 'Yes' good luck with your new purchase.
Save on buying textbooks
Textbooks are quite expensive, but it is possible to purchase most of your textbook list without it costing you an arm and a leg. Here are a couple of tips to help you save:
- Always ask your lecturer before purchasing your books. You do not necessarily need to buy all the books listed for your course, and your lecturer will tell you which books are required for you to complete the course. Try to find out if the books have been used in previous years, this will give you the option of buying second-hand books. Make sure you know the edition and get the correct book as getting a refund might not be possible.
- Shop around - spending a little time searching will often find you great bargains. Second-hand textbooks are quite cheap and are most often in good condition as they have most likely only had one owner.
People will often advertise their books privately and the noticeboards around the university are a good source to find second-hand textbooks among other things. If situations like this you can also afford to do a bit of haggling, so give it a try you might get a few more dollars off. - If you don't have any money to buy books the library carries at least one copy of all the class textbooks. Keep in mind that other students may be borrowing the same book.
- Sharing the cost of textbooks with friends is another option for saving money. You can study together or borrow the book from each other over the semester.
- At the end of each term, you can sell your books if you no longer need them. You can then use the money you get to buy more books.
- Final tip - make sure you do everything as early as possible. There are plenty of people looking for a bargain, make sure you don't miss out! More Financial Options
In the case of needing large amounts of money, sometimes it is more practical to take out a bank loan. Many banks now have packages that allow students to borrow money for study-related purchases or debts with deferred repayment periods. However, it is sensible to keep in mind that you must eventually pay the money back and that 'deferred repayment' doesn't mean that the interest will stop accruing over that period.
