With 78% of students saying finance fears affect their studies, developing and maintaining good money skills whilst at university is absolutely key.
A few days ago, I asked you to share with me some of the struggles experienced by young family members who had no idea how to handle money when they first started university.
The stories flowed in…
One mother told me that her daughter had phoned her in tears, a couple of months into her first semester, because she was broke.
“When I quizzed her about what she’d spent her money on, it emerged that she’d been buying fresh coffee every day, going out every weekend whether she could afford to or not, and had even splurged on some lovely new furniture for her student digs.
“She just couldn’t comprehend the reality of not having money.”
Another parent told me that their son had moved out of his halls and rented somewhere “better”, even though his budget wouldn’t stretch to it.
“It was the only place I was prepared to live in”, he told his father, while asking for help with rent….
There were many more such stories – and it’s hardly surprising.
After all, what experience do kids in secondary school have creating budgets…
….Let alone sticking to one?
And yet, when they go to university, they have to handle quite complex financial matters.
For the first time in their lives, they suddenly find themselves in debt, through their tuition fee loan.
They may be handed significant amounts of money – more than they have ever handled before – in shape of a maintenance loan or various grants.
The temptation to splurge can be enormous. In many cases, they are used to receiving money from mum and dad and spending with no consequence.
Yet now – for the very first time – there are day-to-day expenses for which they are solely responsible.
They might have a deposit for a house to think about, and have to pay regular rent.
How many 18-year-olds have ever paid an electricity bill…. Or a water bill… Arranged insurance… Or even paid their own mobile phone bill?
I’d be shocked if most of them knew what to do.
As for daily living expenses, they might think they’ve thought it through.
But have they taken into consideration their broadband costs and TV licence…
Have they remembered that they’ll have to pay for cleaning items, toiletries and subscriptions – all from their own pocket?
It can be a very delicate balancing act, because most students just don’t have a lot of money.
To stay afloat, they must budget carefully and track all expenses.
But as I said, most students have no experience with any of that, because they’ve never had to.
Now, every family has to work out for themselves the best way to help their children.
Some might decide to give their kids a cash injection, pay some of their expenses or bail them out if it becomes necessary.
But I think that there’s a greater gift you can give your children or grandchildren – if you have any – as well as other young relatives who may be heading off to university for the first time.
You can help them get to grips with the financial basics well before they set off, so that they can manage their own money effectively and responsibly.
By “basics”, by the way, I really do mean basic.
Talk to them about how their credit card works… and what interest on a credit card involves.
Make sure they know how an overdraft works… What “cashflow” means… And how to pay utility bills.
Work out with them the total amount of money they’re going to have, and talk through exactly how they are going to manage.
Help them create their first budget.
And give them The Student Money Manual, which is designed to get them thinking about these key financial issues – and includes lots of practical exercises they can do, to develop a realistic budget and stick to it.
It’s been developed by The Money Charity and we at Punter Southall Aspire are very proud to be sponsoring this year’s edition.
You can’t take for granted that they know these financial basics…Because it’s very likely that they don’t.
During their time in university, they will learn many valuable things.
But teaching them how to live within their means might be the most important of all.
The Money Charity is the UK’s financial capability charity, helping people across the country to understand their finances, stay on top of their money, and lead happier lives as a result. Visit The Money Charity website to find out more their work and how you can get involved.
You can find out more about Punter Southall Aspire's work with The Money Charity here.