Money Saving Tips For Students

While student life is thoroughly enjoyable , there are also nagging concerns about money and debt. There are however quite a few things that students can do to improve their financial position. Below are some tips for the money savvy student :

1. Never buy anything expensive from a shop on the High Street.
You will almost certainly find most things cheaper online. Shops on the high street have higher overhead costs (Rent, electricity etc) compared to online stores. Use online price comparison sites like Kelkoo or Pricerunner to search for the best deals. Once you have found a good deal buy it through a cashback website like Rpoints. Rpoints have partnered with a number of retailers (almost all well known High Street stores are listed on their website).

2. Get the cheapest loans possible - The Government backed , Student Loans Company, provides cheap long term loan. Also make sure you open an account with the Bank that provides the biggest and longest zero percent overdraft facility.

3. Get a job - this can ease the financial burden substantially. You would need to ensure you strike the right balance between work and study.

4. Reclaim overpaid tax
If you take up a job, your tax and National Insurance will be paid automatically, out of your wages, before you even receive them. This is known as PAYE (Pay As You Earn).

If you are earning less than the Personal Allowance for the tax year and you work only during holiday periods, you don't need to pay tax. You must ask your employer for a P38(S) form and fill in the declaration on the form as soon as you begin working and you will be paid tax free. You will need a new P38(S) form for each tax year.
Personal Allowance for 2008-09: £6,035
Personal Allowance for 2009-10: £6,475

If you work outside your holiday period as well , then tax will be deducted through the normal PAYE procedure. However if you haven't earned more than the Personal Allowance in that tax year, contact the tax office at the end of the tax year for a refund of overpaid tax.

5. If you are renting , ensure you get council tax exemptions that you as a student are entitled to.

6. Learn to cook. Make your own lunch - it will be a lot cheaper than the college canteen and more healthier. Cooking is an important life skill.

7. Pay a lot less for the books:
At http://www.sellstudentstuff.com/ - You can buy and sell used textbooks, find student accommodation and trade laptops. You can also buy/sell second hand books at ebay or Amazon.

8. Look for discount vouchers and special offers at http://www.studentbeans.com/. Also the NUS Extra card could save you money at a number of retailers.

9. Save on travel in Britain by using a railcard.

10. If you are young , then let the miracle of compound interest work for you. The earlier you start the better , as there is more time for compound interest to work its magic on your savings.
To illustrate, if you started saving £100 a month from age 20 to 60 (i.e for 40 years) and you got an interest rate of 5%, at the end of 40 years, you would have about £152000. You will have put in only £ 48000 in all (=100x12x40).
But if you started saving £150 a month from age 30 to 60 (i.e for 30 years), you will have put in £54000 in all. But at the same interest rate (5%), you will have only about £125000, at age 60 (even though you paid in £ 6000 more than in the first illustration).

Jay

Zero Pence A Month Mortgage

In 2007, Cheltenham & Gloucester sold a tracker product which charged Bank Of England rate minus 1.01 percent. So when the interest rates go to 1 percent (which it almost certainly will go to in early 2009), they will be left with a mortgage where the borrowers would need to pay nothing on an interest only mortgage. C&G apparently have a floor of zero percent.

As per an article in the timesonline, because C&G's computer systems cannot cope with zero rates, it would be temporarily charging 0.001 percent (on the BOE minus 1.01% mortgage) if base rate is cut to 1 percent - that would translate to about 8.33 pence a month on a 100K interest only mortgage. This overcharge , would of course , be refunded back to the borrowers later !!!

Some lenders have a collar on their mortgage products which will set a floor on the rates - i.e the rates will not fall below a certain level even if the BOE rate goes all the way to zero. For those mortgages that do not have such a collar on a base rate minus tracker , it will be interesting to see if lenders will be obliged to pay money to the borrowers when the base rate goes to zero !

Jay