How to save money as a student

While uni is the perfect time to spread your wings, have fun and for many, move out of the family home for the first time, it’s never too early to get a head start on saving for your future after you graduate. 

A lot of the time, university is when we first learn how to handle money properly, and many of us have had to learn the hard way! If you’re looking to avoid the skint-student life, we’ve put together some of our tips and tricks to help you budget, start saving and prepare yourself for what comes after your studies. 

Five ways to save money as a student

You might already be looking at your bank balance and wondering how on earth you’ll find money to put aside at all, but don’t worry – here are five simple ways to cut back on your spending and make saving easier. 

Work out a budget

This should be the first thing you do before you go to university, once you’ve confirmed how much maintenance loan or other income you’ll receive throughout your studies. It might seem like a chore, but setting a budget for your outgoings will really help you think about where your money is going, and will help you to avoid accidentally overspending and ending up in a tricky situation until your next payday. 

Write down your total income, subtract all of your outgoings, such as food, travel, rent and bills. What’s left is disposable income, for you to save or spend on other things that aren’t necessities. You can find online templates to use, or you can just go through your bank statements to add up the total of your existing bills and add new ones on top – such as rent or gas and electric. Once you’ve got a completed budget, keep your spending within it. 

Learn to cook 

If you’ve just moved out for the first time and you were partial to your parents’ cooking, you might find yourself eating out a lot at uni or buying most of your dinners. But, if you went through your transactions, you might be shocked at just how much you spend on food when avoiding the kitchen. 

While learning to cook is easier said than done, you can find countless easy recipe sites online, or loads of simple cooking apps. Watch some YouTube tutorials or pick up the phone to your parents and ask how it’s done – you’ll save a huge amount of cash by preparing meals at home, rather than eating out or ordering in. 

Bulk cooking is also a great way to ensure you don’t get caught short for time when getting home from class. Cook a big batch of meals and store them in the fridge or freezer and save money in the long run. You might not be tempted to order in or eat out when you’re not in the mood to cook if you can just grab a meal you prepared earlier and warm it up!

Student discounts

Most shops and high-street retailers offer a student discount, and even some supermarkets too, ranging from 5%-20% usually. Monthly subscriptions such as Amazon Prime and Spotify usually offer even bigger savings – sometimes up to 50%.

However, a lot of places require your student status to be verified to honour this, especially when shopping online, so make sure to register with online student discount providers so you don't miss out on saving cash on your purchases.

Always ask if the retailer offers student discount before buying anything!

Don’t stay in your overdraft 

Most student accounts offer interest free overdrafts – which might seem like free money, but you should only dip into it when absolutely necessary. Once you finish your degree, your account will likely be changed to a graduate or current account, and you can start to accrue hefty overdraft charges if you’ve not brought your account out of debt. 

If you do dip into your overdraft – don’t panic, it’s there as a buffer, but always try and fully pay it back as soon as you can and try to avoid going back into it if possible.

Optimise your travel 

Public transport prices can add up if you use it often and students of university age can pay more for their car insurance due to “Young and Inexperienced Driver” clauses* as they're usually under 25. If you’re going out and about, or don’t live near your university campus, you could soon see a sharp rise in travel costs. 

Always look into the cheapest bus and train passes available for your routes or consider getting a car with a smaller engine, and maybe even a black box insurance plan, if you’re driving. And, if your destination is in walking distance, it’s always best to take the stroll and save some cash – plus it’s better for the environment.

When should you save your money as a student?

It’s one thing knowing how to save, but it’s another knowing when to save – what’s the most efficient way to get your cash piling up?

Every month

If you’re working and receive your wage on a monthly basis, it’s probably going to be easier to put money aside monthly too – you can even do it the day you get paid in-line with a planned budget. 

Every week 

Again, if you’re working alongside your studies and receive a weekly wage, you’ll find it easiest to put money into your savings every week when you get paid. 

What should you be saving for?

Whilst in university, it’s good to look ahead to what happens at the end of the academic year – or even when you graduate. We’ll look at the three main reasons to save whilst at uni, and the best accounts for this. 

Saving for a holiday

University can be stressful – whether you’ve been working hard all year, or need to celebrate your graduation, a holiday is always a great break and one of the best ways to step back and recharge. 

Putting cash away for a holiday is a great idea – you could avoid paying interest if you pay for your holiday all at once, rather than putting down a deposit and paying in installments. Plus, you’ll need spending money to take with you too. Saving bit by bit means you can ensure you won’t be counting pennies whilst away, but you won’t be caught short before your holiday either.

Many people use a regular savings account when saving up for a holiday – you’ll commit to depositing into the account each month for an agreed period of time. These accounts can offer a higher interest rate, meaning you’ll earn more money just for saving in them, and early withdrawal penalties aim to keep your savings on track.

Check out our range of regular savings accounts here. 

Rainy day fund 

If you’re just looking to put money away for no reason in particular – for spontaneous plans, emergencies or just as a safety net while waiting for your next loan payment – you might consider an instant access account. 

Instant access accounts still offer an interest rate but allow you instant access to your account and don’t penalise you for making a withdrawal. This makes them appropriate for rainy day funds – as you don’t know when you’ll be dipping into them. 

View our instant access savings accounts.

Buying a property 

While you may be living in halls, student houses or flats throughout uni, it’s never too early to start thinking about where you’ll be after graduation. If you’re looking to get on the property ladder once you’ve completed your degree, consider where you put your funds in order to get the most out of your savings – the more money you can save for a deposit, the better. 

The Lifetime ISA allows people aged 18-39 to save up for a deposit to put towards their first home (but these accounts can also be used to save money for retirement). The maximum Lifetime ISA contribution in the current tax year is £4,000, which can be deposited as a lump sum or in multiple payments. You’ll receive a 25% Government bonus on everything you save into the Lifetime ISA so you could end up with £1,000 bonus each year if you save the maximum £4,000. Alongside a Lifetime ISA, you can also save into a regular cash ISA or other saving accounts. A total of £20,000 can be saved across both accounts in one tax year which is called an ISA Allowance.

If you choose to withdraw funds from a Lifetime ISA for anything that isn’t a first home deposit or a retirement fund (only at age 60!), you're likely to be charged 25% on the total withdrawal so you could get back less than you put in. If you're determined to save early during your time as a student, this penalty could act as a deterrent to prevent you from dipping into your savings for night out funds! 

Open your Lifetime ISA in branch or online with £10. 

A Help to Buy: ISA is also an option when looking to buy a home, but you wouldn’t be able to use the cash you had saved in a Help to Buy: ISA as an exchange deposit. The Help to Buy: ISA 25% bonus on your savings won't be released until after your house purchase is complete and you have applied to close the account, meaning you can’t actually use it to get your exchange deposit together, but you can use it for home renovations or decorating your new home. However, you won’t be able to apply for a Help to Buy: ISA account after 30th November 2019.

You can still open a Help to Buy: ISA in branch until 30th November. Compare both the Lifetime ISA and the Help to Buy: ISA with our helpful guide.  

Saving strategies 

While you’re now equipped with some knowledge on how to cut down on your spending and save some money, it’s also worth looking at how to correctly work savings into your budget, so you reach your savings goals sooner and get used to consistent spending habits. 

50/30/20 Rule

This rule helps you save 20% of your income, leaving 50% for your most vital payments, such as your rent and utilities, minimum debt repayments, car payments, food, toiletries, and anything else that’s essential to live. Then, 30% is left over for things that you want, but could survive without – such as entertainment subscriptions, new clothes, meals out etc. 

20% is then left over for you to save in an account of your choice, depending on what you’re saving for. 

80/20 Rule 

Essentially, this rule is the simplified version of the 50/30/20 budget structure. If you’re finding it difficult to discern between what you want and what you need, or perhaps you know you won’t commit to tracking all of your spending – eventually sacking the whole thing off because it’s too much effort – then simply put away 20% of your income, and spend the other 80% on everything else. 

26-week challenge 

The 26-week challenge is perfect for those with weekly paydays – start by saving a pound, then increase by £1 each week. For example, on week 1 you’ll save £1, £2 on week 2, £3 on week 3, £4 on week 4 and so on. By the end of the 26 weeks you’ll have £351– and you’ll have eased into setting aside pretty considerable savings by starting small. If you like, you could re-start the challenge when you’ve finished, and then in one year you’ll have saved an impressive £702!

Click here to find out more about our savings accounts, or check out our other blog posts on The Hub for more saving tips.

*USwitch Student Car Insurance 


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