When Martin asked me to guest blog for the site, I had no idea what to write about. Having read quite a few personal finance blogs of his and on other sites, I said ‘I don’t have anything to say!’. What I failed to recognize at the time was that I do have something to say about money… that is, I don’t have a lot of it.
I’m coming to the end of my final year of an undergraduate Liberal Arts degree. I live in the UK and I am lucky enough to be eligible for a tuition fee loan, a maintenance loan, a maintenance grant and a university bursary. This might sound like I’ve got an income that is ‘livable’ but when you start to do the numbers, you wonder how many undergraduates manage in the financial situation they’re in. Spoiler alert – they don’t.
Many of my peers have exhausted themselves working up to forty-hour-weeks alongside their studies, many will do long commutes to save living costs of moving into the city, many live in sub-par accommodation because the rent is cheap… the point I’m trying to make is that there seems to be a mythological idea that student finance in the UK is ‘more than enough’.
Because my student finance wasn’t more than enough (let’s call the actual income a ballpark £7,500 a year) I have done just about every daft and dangerous thing with my personal finances.
Amongst these money mistakes are:
· Getting a store card at eighteen
I walked into a clothes store having lived in hand-me-downs and raggedy old items for several months and they told me about this shiny way of purchasing clothes without actually exchanging any money at the time. It sounds so very appealing and you’re sure you’ll pay it all in full at the end of the month but that’s not quite the case. Store cards have hefty interest rates – many over 25%. Some entice you in with introductory offers and membership benefits but the truth is, store cards are quick and easy ways to accumulate nasty debt.
Cutting it up was the best thing I could have done!
· Maxing out my overdraft early (because it was ‘interest-free’!)
When I opened my student bank account, I did look around to see who offered what. However having had virtually no financial education and not having sought it out myself, I didn’t really know what I was comparing the accounts for. This meant that I chose the one with the biggest interest-free overdraft because again – ‘free’ money.
I soon maxed the overdraft out because I thought there’d be no repercussions. As I’m approaching the end of the course, I am more than aware that interest rates will start to apply and that the balance is a pretty big figure at the moment. This is one of my priorities in terms of whittling it down once I have a regular monthly income from employment.
· Frivolous spending ‘because I can’
I’m not talking a £90 pair of boots or a slap-up meal for me and my partner here. When you’ve got little disposable income, you often tend to ‘treat’ yourself more to the little things because you’re fed up about not being able to put your money towards something more substantial.
I’m sure many students can tell me about nights at the pub, weekend takeaways or that little purchase that you don’t need but you really wanted. While it’s important to recognize that this kind of behaviour isn’t helpful all the time, a budget and some carefully selected small treats will help you not to feel so downtrodden. There’s frugal and then there’s going without.
I had to make myself buy new socks the other day because I was being too frugal – if you need it, you need it!
· Not learning about money and PF sooner
This is the killer. A lot of people complain that simple money management isn’t taught in schools but what people fail to realise is that the responsibility ultimately falls down to you. Your parents, friends, financial advisers, accountants, whoever can suggest how you should handle your finances but when it comes down to it, you’re the one in control of your spending, your saving and what you buy or invest in.
I’ve recently taken up this task and have found loads of great blogs about personal finance, investment, early retirement and peoples’ journeys to becoming debt-free. Whilst their content is inspiring for someone who may have a few money mistakes, it’s also hugely educational and worth reading about if you want to secure a better financial future for yourself.