How to Make the Most of Your Student Loan

So, your student loan’s landed and it’s time to go crazy buying clothes, right? Before you go all out with the online shopping, check out our top tips for making your student loan last.

It’s probably a good idea to get a plan in place before you even consider going all-out on a new laptop (as tempting as it can be). No one wants to be left with £5 a week to live on at the end of term, so it’s worth thinking in the long term before blowing your loan early on.

To give you a hand, we’ve put together a handy guide on how to budget your student loan for the rest of the year, so you can make it until the next instalment with some pennies to spare.

So, grab a pen and paper (or the notes app in your phone) and let’s get budgeting 👇

Figure out your income

Start off your budgeting by figuring out what your expected income is. It’s best to work this out monthly, as this usually coincides with any paydays from your part time job. Plus, it’s easier to work out your budget in smaller, monthly increments.

Total up all your expected income sources. These include:

• Your student loan instalment (divide the total instalment amount by the number of months it needs to last you to work out your monthly budget)
• Your typical monthly income from your job(s)
• Any monthly payments from parents or carers
• Income expected additional income from side-hustles, such as selling clothes online or promoting for clubs

When you’ve got your initial monthly income amount, it sets the expectations on what’s affordable.

TIP: It’s best to underestimate your income where possible, to allow for the worst-case scenario. This allows for flexibility if anything goes wrong and avoids you ever being short of extra cash.

The big expenses

If you’re living in a student home while at university, you’ll have some big expenses to consider before splurging. By preparing for these expenses, you’ll be better prepared when you’re due to make payment.

Your rent is likely to be your biggest expense, with utilities and bills coming in second. It’s important to priorities these payments, as they usually have unfortunate circumstances if payments are delayed, such as fees or interest. These payments include:

• Rent
• Electricity
• Gas
• TV licence
• Water

Calculate how much it’s going to cost per month for these regular, large expenses, and make sure you have this set aside each month for when they’re due.

TIP: If you’re looking for a hassle-free way of paying your utilities, using a company like UniHomes means you only have one payment coming out every month. You’ll have no payment surprises, and don’t need to worry about setting up/cancelling contracts.

Organise your direct debits

Got a Netflix subscription? What about Spotify? Direct debits can sneak up on you, especially if they’re in small payments and are scattered throughout the month. Keeping on top of these payments means you won’t face any surprise card-declines when it’s your round at the pub.

Have a look at your bank account from the last few months and pick out all the direct debits you have set up, or any usual payments you know you need to make. These include:

• Subscription services (like Netflix and Spotify)
• Phone bills
• Gym memberships
• Car payments

These small payments can definitely add up. While you’re here, see if there’s any way you can reduce or eliminate these direct debits. Could you share a Netflix account with someone? Or use Spotify Family to pay less every month? Can you change your phone plan? Have a look around to double check you’re getting the best deal.

TIP: See if you can arrange for your direct debits to come out on the same day every month, so you know exactly what’s coming out of your bank account and when.

Plan your monthly expenses

After accounting for your big expenses and direct debits, you should know how much you’ve got left over each month for groceries, leisure, and (obviously) the pub. This part is a bit more flexible, as it’s up to you how you divide your spending. 

Calculate your budget by working out your estimated weekly expense for the following:

• Groceries, including food, toiletries and the weekly takeaway (obviously)
• Transport, including petrol, bus rides and train tickets home
• Laundry services (if you don’t have a washing machine)
• University books, reading material, printing credits or other related necessities

We recommend setting aside a certain amount each week for these groceries and necessities. It’s likely that these expenses won’t amount to LOADS each week, but setting this money aside means there won't be negative consequences if you overspend. If you budget monthly for everyday expenses, you’re more likely to go off-plan and be left having toast for every meal right before payday.

If you want to spend £30 a week on booze and £5 on groceries, go ahead. There are no consequences to how this is spent (apart from a bad hangover), as long as you don’t go over budget. It’s best to go easy on yourself with this, and not beat yourself up too much for unnecessary spending. Just make sure you adjust this each week based on how last week went.

Let yourself splurge

Yes, you heard us right! Now you’ve budgeted for the next few months, it’s worth treating yourself if you’ve got a bit of extra cash left over. After all, you’ve not been waiting weeks for your next student loan instalment date to NOT spend any of it, have you?!

It’s time to go all out and get that Xbox game, or buy the eyeshadow palette you’ve been DREAMING about. Now you know you can afford it; it’ll make it that whole much better. Just try not to break the budget straight away, and work with what you have left over.

Our tops budgeting tips

So, now you know how much you have in your budget, we’ve put together some tips on how to make the most of your money. Here are some of our quick and easy top budgeting tips, so you can make your loan last as long as possible.

• Use a separate bank account for daily spending
Getting an online bank account, such as Monzo or Starling, makes it a lot easier to track your day-to-day spending. These accounts take 5 minutes to sign up online, so it's dead easy to get started. They take any money you spend out of your bank account immediately, so you’re not waiting around for your available balance to update. Plus, they come with their own in-house budgeting options, which show you where you’re spending the most money.
• Pay yourself weekly
Every Sunday, transfer yourself your set spending for that week. This could be by taking out your budget in cash, or transferring it to a different bank account. By working on a week-by-week basis, you’re more likely to stick to your budget, and you won’t need to worry about being broke at the end of the month. Plus, it makes things a whole lot easier knowing you’re on track.
• Utilise discounts
UCAS recommend looking around for what you can get for free, such as discounted rail travel and free prescriptions. Make sure you have a student card on you at all times, and it’s worth shopping at stores that offer a discount. Even if some stores don’t offer bonuses for students, it can’t hurt to ask.
• Set some goals
Save the Student recommend setting some goals with your money. If you’re left short on cash at the end of your budget, that doesn’t mean there isn’t room for improvement. Whether it’s putting £20 a week into savings, or cutting back takeaways to once a week, setting goals can soon lead to big changes in your bank account.

Now you're ready to get budgeting 🙌 Make sure to keep coming back to your budget every few weeks and adjust it based on how things are going. The best way to make your student loan last is to keep your eye on your spending, so the chances are that if you've got this far, your loan will stick around for a while.