Students require ‘good money management skills’

Young people continue to struggle with debt as the cost of the education increases.

With many students facing yearly tuition fees of £9,000, the requirement to budget properly has never been greater, as individuals need to make sure they are not spending more money than they can afford. For some, apprenticeships or other post-school schemes will become increasingly attractive, as they do not want to be left saddled with such a large amount of debt. 

However, many youngsters will still make the decision to attend university and this is why the right structures need to be put in place to ensure they do not finish their degrees with extensive debt problems. 

Good money management

According to the Money Charity, the current student loan repayment system does not encourage good budgeting. The body thinks it would be much better if university goers received their loans monthly, rather than per term, as this would give them a far better understanding of how much money they have. It also thinks encouraging monthly budgets would also stand them in good stead for their working lives, when they will typically be paid in this way. 

Chief executive officer of the Money Charity Michelle Highman said: "For most students, their first term's payment is the biggest amount of money they've ever seen, so the temptation to spend unwisely is huge. Monthly payments would help students manage their money more effectively whilst at university, reduce the risk of temptation, and normalise monthly budgeting habits, which they will need for the rest of their lives."

Luis Juste, director of Santander Universities UK, agrees with Ms Highman, as he thinks many students can be left with their university years being "dampened" if they fail to look after their finances. 

Financial acumen

A recent study by Experian CreditExpert discovered that many youngsters are guilty of poor financial practices. Some 26 per cent overspent on a credit or store card, 38 per cent forgot to make a payment on time and 18 per cent struggled to keep up with the repayments on a big purchase. This sloppy attitude cannot be allowed to continue, as it sets a dangerous precedent that people may continue to follow. 

If students are moving out of the house, it is even more important they put a plan in place to make sure they can pay all of their bills. For example, calculating roughly how much utilities will cost gives them a guide of the amount they have to set aside every month and how much disposable income they will have. 

Individuals are also encouraged to regularly check their bank accounts for fraudulent transactions, to make sure they have enough money for their direct debits and so they do not accidently go into an unauthorised overdraft, which will see them incur needless bank charges. 

The Personal Finance Education Group (pfeg) is also encouraging Britain's youngsters to be sensible with their finances, as it has discovered people are finding it harder to manage their money now than they did ten years ago, which demonstrates the scale of the problem.  

By James Francis