10 Ways of Getting Graduate Finances off to a Great Start

August 18, 2008

Get your graduate finances to a great startGraduating from university is a life changing event, especially in the UK. There are the parties, celebrations and well wishers; there are also the many changes that suddenly take place. The graduate in Great Britain no longer has a well defined daily routine and foreseeable expense; instead, suddenly there is the change from student to job hunter, and job hunter to career minded worker.

In many cases, the fresh baked graduate in England will be earning a living for the very first time. Unfortunately, some former students leave university and enter the workforce with a lot of student loan debt as well as credit card balances and even the occasional overdraft. There are 10 surefire ways of getting graduate finances off to a great start, and if you want to earn high marks in fiscal responsibility, you will do well to listen up.

1. Budget your monthly expenses. You are most likely now faced with expenses which differ from those you incurred while you were still living as a student. When you determine early on where you money will go, you will get a head start on putting a big dent in your outstanding debts and getting them paid off quickly.

2. Pay off your student loan debt last. Since the Government sponsored student loan deal offers the cheapest interest rates currently in existence, it is worthwhile to eliminate higher interest debts first. Additionally, repayment does not begin until you are bringing in £15,000. This leaves you most likely with your overdrafts and also credit card debts.

3. Plan your debt repayment. Knowing how much you owe and how much you can afford to put toward your debts is vital for a sound budget. Getting caught unawares with respect to outstanding bills and balances may lead to financial disaster. If you find that you have a hard time meeting all of your financial obligations, consider consolidating them onto a transfer card that offers 0% interest.

4. Initiate a savings plan. After your debt repayment is scheduled and you have found a way of incorporating aggressive debt reduction in your overall budget, it is time to also put some money away. Opting for an interest earning Cash ISA that also offers tax sheltering is a good idea. The sooner you begin saving, the more will accumulate over the lifetime of the account.

5. Open a graduate account that meets your needs. Even if you have already opened a student account previously, consider moving your business to a different banking provider. After all, what suited you well prior to graduation may not be exactly what you need a couple of years down the road. If you can show that you qualify for the account and your banking history with your initial student account is solid, there is no reason why you may not move your business.

6. Exercise fiscal savvy rather than falling for handouts. You may be offered teaser rates and freebies just for opening an account with one bank over another. Perhaps you are offered discounted CDs or mobile phone savings, but when these are used up, you are left with a graduate account that costs more money than you saved with the free offers.

7. Know your approved overdraft rate. If you must let your finances go in the red, you may do so at a cost. Some graduate account providers offer as little as 10% interest while others will charge as much as 18%. Interviewing different banks has an advantage in that you can compare rates before you may need to pay them.

8. Know your gratis overdraft limit. There are a couple of graduate account providers who permit you to operate in the red to the tune of £2,500 in the first year, £1,000 in the second and £500 in the third, without charging any interest.

9. Be aware of your unapproved overdraft cost. If your red turns redder and you go beyond the agreed upon terms for overdraft protection, you will incur interest charges at a different rate. These fees vary by provider, but may run to the tune of 14.8% all the way up to 29.8% plus an additional £30 per day. Avoid this kind of accounting mistake whenever possible but shop around for the most favorable terms before doing business with any bank.

10. Cast an eye toward property ownership. Learn about mortgages, chart the housing trends, and think twice before you sign up for a 100% mortgage product; it is usually too expensive in the long run.

The Smart Student Finance Guide

August 17, 2008

Smart Student Finance GuideLeaving home for the very first time brings more than just the long awaited freedom: there are now books to read and study papers to draft, classes to attend and schedules to keep. In addition, for the very first time the average student will come face to face with the bills that need to be paid for everyday commodities such as rent, electricity, and laundry. Students who may have looked forward to university, but might not have considered the intricacies of fiscal responsibility, will benefit greatly from the five steps that will help with becoming money smart quickly and easily.

1. Open a student bank account that meets all of your need at the minimum costs possible. You may want to favor one bank over another because of the freebies that are used as incentives for university students bringing their business there, but no CD or cinema ticket is worth the cost of an account that gradually eats away at the value of free items with fees and costs of doing business. On the other hand, some incentives – when coupled with advantageous student account terms – make for attractive and money saving offers.

2. Work on your budget. Know how much money you will receive on a monthly basis and then set up a list of all expenses. Your expenses cannot be more than your incoming funds, and it is important to make the budget and then follow it. Online budget planners are a good way of inputting schedules for paying your tuition fees and also rent and other expenses. This prevents any last minute surprises and will not catch you halfway through the month with no money left.

3. Find a job. Even as your primary job is getting a good university education, a secondary job that brings in money is oftentimes the only way to make ends meet. In addition to helping with defraying some of the costs you incur during your education, you are gain valuable work experience and references, which will come in very handy after graduation.

4. Open a savings account to help with the big ticket expenses. Payments on your student loan will come due thrice in a year, and having this much money in you main operating account might tempt you to buy things you really should not spend any money on. A secondary savings account will put the money out of harm’s way, let it earn some interest, and allow you to contribute to it at regular intervals. When the student fee payment comes due, you do not have to scramble but have your funds ready.

5. Save money in the right places. Second hand buying is synonymous with student living, and skimping in the right places can save you substantial sums of money. Books almost always can be had second hand, and the same is true for a bike and basic appliances. Always check for deals at the grocery store, and make use of group discounts at clubs and other venues.

Student loans in the UK

May 3, 2008

Student loans in the UK

The content of this section is related to student loans for those who started higher education after 1st September 1998. If you started before this date the situation is different and, thankfully, somewhat simpler. Details on this type of loan (and futher details on post 9/98 loans) may be obtained from the Student Loans Company.

When did this type of student loan start?
Income contingent loans started in August 1998 with the introduction of tuition fees.

When do I have to start repayments?
Repayments don’t start until the April after you graduate. Even then you won’t have to start repayments until you are earning above £10,000.

How is this paid?
This will be taken out of your salary at source in the same way as PAYE deductions.

How can they take money from my salary?
You provided your National Insurance number when applying for the loan.

When will I be informed?
In February after graduation the student loan company will write to you to let you know how much you owe.
Then in April you will receive a monthly repayment schedule. The inland revenue will be notified and these payments will be deducted from your salary.

What rate of interest will I be charged?
The interest rate is varies and is linked to inflation. This interest starts the day you get your first loan. For current interest rates see the student loans company.

What is the repayment rate?
The default rate is 9% on all income above £10,000. This may be increased by contacting the Student Loan Company.
Myth: My student loan will be automatically deducted from by wages at the appropriate level in the same way as my PAYE deductions.

Fact: Unfortunately neither your employer nor the Inland Revenue can be relied upon to be right in every case. It is important that you know how much you should be paying.

Example: Possible Tax Overpayments.

Overpayment may occur on switching employers. When leaving an employer you will be given a P45. This shows your employer how much tax you have paid over the previous year. This P45 does not show the amount of student loan repayments made whilst with your previous employer. Then when you receive your P60 at the end of the tax year any previous payments will not show on it.

Ultimately your new employer may tax you on gross salary without repayment deductions.


Check how your loan payments have been shown on your payslip. Keep all payslips as proof of payment and earnings. Always compare March payslip with April P60.

If you establish you have been paying too much tax, contact the Inland revenue straight away. They will be able to calculate how much tax you should have paid, and how much you have. If there is a deficit you will receive a rebate.

For more information see the students loan company.

Welcome to graduate finance

May 2, 2008

Graduation photo

Welcome to graduate finance, your guide to all things important to recent graduates.