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Financing your children at university

It is a proud moment for all parents when their children head off to university, but it can also be daunting and overwhelming for many reasons. Your child will suddenly be left to their own devices; cooking, cleaning, laundry – all things they may have relied upon you for previously. But sometimes more worrisome is the financial side of university. With tuition fees costing £9250 per year, and rent and living expenses on top, it’s not a cheap few years and student loans often fail to cover the full amount. The average cost of halls of residence for one week was £147 in the year 2018-2019 outside of London. This amounts to almost £6000 a year over the 39 weeks students spend in their first year at university. While this often includes bills, it doesn’t include any general living costs. If your child’s student loan only just covers their accommodation, then you will need to find an alternative way to finance things like food, travel and leisure.

Where to start

The best place to start is by talking directly to your undergraduate. If they understand that you will need to finance some of their outgoings while they are at university, and that it may put a temporary strain on your finances, you’ll both open the conversation on the same foot. This is always a good starting point for any money-related conversations.

There is a general understanding that university students tend to scrape by, so it won’t be a shock that they may have to cut back on a few luxury expenses they may have taken for granted. But this doesn’t mean they should have to completely avoid fun as this is part of the experience. Instead, try to reach a mutually agreed budget.

University Budget

There are several online budget guides for the costs of living at university. Many universities will have their own dedicated webpages, but there are also online forums and student budget calculators for parents of students attending university. First year students tend to live in halls of residence, which often includes utility bills in the weekly rent price. This means it may seem more expensive than private student accommodation, but overall, it usually works out to be a similar price. In the second and third year, students are typically required to find their own housing, and often share with friends. The rent costs will vary massively depending on the location and condition of the property so they may have to compromise to reach an affordable conclusion.

Aside from rent and utilities, other essential living expenses may include:

On average, student groceries cost around £100 per month, so aiming for a budget of £25 each week is a good starting figure. Of course, your child’s food requirements may vary depending on their activity levels and any dietary requirements. It’s estimated that transport costs come in around £35 and course materials are approximately £17 monthly, however this could vary depending on the degree. Students may be required to purchase their course materials upfront, but you can often find second hand textbooks on online marketplaces, and universities should have copies in their libraries. You may already pay your child’s mobile phone bill, so there might be no change here, but it could be worth changing to a cheaper plan or going sim-only if their contract is due to end soon.

Other non-essential costs usually include takeaways, nights out and clothes. These are discretionary so if your finances are tight, it might be a point of compromise, but it is almost a rite of passage for university students to experience nights out and socialising so these things should be factored into the budget. Of course, your child may decide to get a part-time job to help finance their social life. Ultimately, you want to help your child and ensure they don’t use instant payday loans or other borrowing that they can’t afford to repay, but equally, you don’t want to fall victim to financial difficulty as a result of trying to support them.

How to adjust your budget

Once you’ve agreed a fair budget for your child’s weekly or monthly spending, you need to work out how you can assist with those costs if their student loan isn’t sufficient. You may have to divert your existing savings or create a new budget altogether. The important thing to remember is the timescale of a university degree, as 3 or 4 years of additional expenses can considerably affect your finances, so any changes you do make need to be sustainable. There may still be times when you need money fast and can no longer meet your child’s needs that month, so maintaining an open conversation and perhaps creating a small back up during more lucrative months is a good idea. Your child will likely have a student overdraft with a significant credit limit, and while you don’t want to encourage them to use it unnecessarily, it is a reasonable fallback in times of emergency.

You can also consider the expenses that will reduce now you won’t be paying for your child to live at home. Food shops will go down, takeaways will be cheaper and even things like days out and holidays will drop markedly. Use this to your advantage: consider putting those funds in a separate account to transfer to your child when they need extra cash while at university, or perhaps set up a couple of standing orders to a savings account so the money leaves your account when it normally would. This means you won’t notice the difference from your current spending and is likely to have less of an impact on your current budgeting and cashflow.

If you find that the money you need to send to your child while they’re at university is more than the amount you are saving from them moving out, it may be time to review your existing budget. Are there takeaways that could be missed? Are you paying for any subscriptions you don’t use? Could you change broadband or energy providers to save a little cash here and there? Even if you end up reducing your budget by only £100 a month, this covers your child’s food bills which is one of the more important expenses. You could consider switching bank accounts to take advantage of cashback rewards – the £100-£200 incentives would go a long way for a university student. And finally look at your invisible spending. This is the money you spend without realising and for most people can accrue to a few hundred pounds each month. You don’t need to stop day-to-day spending altogether but being aware of exactly where your money goes is a great place to start when reassessing your budget and trying to save.

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