Financially independent for the first time? 7 tips on how not to blow it

If you’ve started university or college and have moved away from home recently, it is probably the first time in your life that you’ve been financially independent.

That’s exciting in so many ways! But it can also be pretty daunting if you haven’t really had to manage money very closely before.

Let’s face it, most of us rely on our families to provide guidance on money and, up ‘til now, they’ve probably provided you with a fair amount of the day-to-day things you’re now going to be paying for yourself – from food to electricity bills.

So, where to begin when working out how to make your money go as far as you need it to?

We have put together this check list to get you started:

1. How much do you have coming in?

It may sound like a very obvious place to start but assessing the money you have coming in is one of the best things you can do in your first student days. You may be receiving parental support, a grant or a student loan. The majority of loans are paid in three or four instalments, which means it is up to you to divide this down into what you can realistically spend on a monthly basis. Many people take on part-time jobs while studying to provide additional income. So, make a list of what is coming in and when it will be paid from one month to the next.

2. How much are you spending, and on what?

Again, this may sound easy but there are a lot of costs you won’t have had to think about before which will make this list longer than you might expect. Rent and food will add up, then you have to think about travel costs, electricity, heating, a TV licence, any technology you need for your course and your mobile phone contract. If you are studying then you also need to factor in some money for books at the beginning of each term. It is good to check if you can buy these second hand from students who have already completed the course.

3. What if my outgoings are more than my income?

This is when you need to consider other options that are available to you. We recommend speaking to your bank to explore your options – which may lead to an overdraft or a loan. An overdraft is a form of short-term borrowing, a safety net that allows your balance to dip below zero if you don’t have enough in your account to meet an unexpected payment.

There are two types of overdraft – arranged and unarranged. As the name suggests – an arranged overdraft has been pre-agreed with your bank up to a set limit, giving you peace of mind that you'll be able to make unexpected payments or get money in an emergency. You can borrow from it any time, as long as you stay within your limit. There may be costs to pay with an arranged overdraft.

An unarranged overdraft is when your account balance either goes overdrawn without an arranged overdraft in place or goes beyond your arranged overdraft limit. When this happens your bank, will look at your circumstances and then decide whether to allow any further payments from your account.

It’s worth bearing in mind that banks can ask you to repay your overdraft in full at any time. You can read more about our overdrafts on our webpage.

4. Stay in control of your finances

Your finances will fluctuate from month to month, and it is important that you watch every penny. With us you can get text alerts (like when your account reaches a certain balance; or when your overdraft reaches a certain level) and keep an eye on your account through our app. You can also download budgeting apps, like Yolt, where you can connect your Danske account via Open Banking. These help you to monitor your spend closely, set clear budgets and select a monthly amount to be added to your savings pot.

5. Shop around

Now is the time to make every penny go further so take some time to shop around for everything you need. Do your research on where you can get your weekly food shop for cheaper and sign up for loyalty schemes which could offer you regular discounts. Sites like Money Supermarket will have tips on how to make the most of what you have. Even though we know these comparison sites are out there, most of us still don’t bother to shop around.

6. Keep in mind your credit score

This probably feels like an alien concept at the moment, but your credit score will be very important later in life when you decide you want to get a mortgage and buy a house. A credit score is used to give lenders an overview of how credit worthy you are, or how likely you are to pay back what you owe. You can check your score for free on sites like Experian.. To have a good credit rating you need to have made payments reliably, keep your use of credit low and be able to prove where you live.

7. Dealing with your debt

If you are struggling with debts – including paying back shop credit cards, overdrafts and more – but have decided that you want to try to get out it, you should speak to your bank in the first instance. They’ll also be able to signpost you to a range of organisations, like Advice NI, who will be able to help with practical steps for lifting you out of debt.

If you get on top of these basics of money management early, there’s a good chance they will stick and become habit. Good habits will help you get the most out of your financial independence.