University can be an extremely expensive time for both parents and students. Accommodation, travel and utility bills all add up meaning it is essential for students to keep control of their finances.
A new study of 500 UK undergraduates was conducted by Nationwide to find out if students are aware how to budget before they begin living independently at university. Almost seven in ten (69%) said they were taught insufficiently about finance and were ill prepared for student life, with nearly a third (30%) saying they taught themselves everything they know about how to manage money.
Dan King, Nationwide’s Head of FlexStudent Current Account, said: “University can be an extremely expensive time for parents and students alike and often parents are expected to cover the shortfall, putting them under increased pressure and resulting in tightening of their purse strings. For students to manage their own financial situation effectively, they need to understand how finances work and learn to budget, so they can stand on their own two feet.
Students polled also admitted that the lack of knowledge around budgeting didn’t stop them being frivolous with their student loan; 29 per cent said that they spend it all within a few months of receiving it, and just over one in ten (11%) confessed to spending it in the first month. Just a few of the things students admitted to splashing their loan on included:
• Nights out (67%)
• Nice clothes (66%)
• Holidays (30%)
• A car (8%)
However it isn’t the students who are bearing the brunt of frivolous spending, it is their parents. A further study, also by Nationwide Flex Student, of over 600 parents of past and current students revealed that two thirds (68%) make up the shortfall themselves, leaving them living a life of austerity and cutting back their standard of living to pay for their children to get a university education.
It’s vital that students are given guidance before and during university life, that’s why Nationwide, as a mutual, has created a student current account that is simple and flexible to use
Parents are finding themselves stuck on a strict budget once they send their child to university, with many fun outgoings being cut. The cuts to their lifestyle mean savings (34%) and holidays (29%) take a hit – not only this socialising (25%) is impacted and treats such as a new car (22%) and even fun expenditures (22%) are all affected.
Some parents are even forced to take more extreme measures. Almost one in six respondents (15%) borrow money or get in to debt, and one in seven (14%) take a second job or delay early retirement (14%). But with parents estimating the bill for university to be in the region of £2,500 per year, totalling £7,500 for a three year course per child, it’s perhaps not surprising that cutting basic outgoings is essential.
King said: “From an educational standpoint it’s vital that students are given guidance before and during university life, that’s why Nationwide, as a mutual, has created a student current account that is simple and flexible to use, with an interest-free and fee-free overdraft that puts the student in control. It also comes with a whole range of interactive education support and tools at www.yourstudentmoney.co.uk, helping to ease the pressure financially for both parents and students.”