Money: How to prepare financially for university

Juggling rent payments and other living costs can be difficult on a budget. MoneySupermarket.com has teamed up with Graduate Prospects to provide financial help for your time at university

It's important to have the right student bank account and make sure that you claim any financial help you might be entitled to. But savvy students can make their money go even further with careful budgeting and specialist insurance deals. Read our guide to preparing financially for university…

Apply for financial help

From September 2012, all UK students starting university are entitled to a tuition fees loan of up to £9,000 from the government. This is not means tested i.e. this doesn't depend on your family income, but it has to be repaid once the course ends.

If you are from a low income family, you may be eligible for a maintenance grant to help with living costs which doesn't need to be repaid. The maximum grant available for 2012/2013 is £3,250, available to full-time higher education students from homes with a household income of £25,000 or under. You'll get at least a partial grant if your household income is £42,600 or under.

There is also the maintenance loan, which is repayable at the end of your course and is worth up to £5,500 if you live away from home and are starting university this September. Those moving to London are entitled to £7,675. If your plan is to continue to live in your family home while you're a student, you will receive up to £4,375. Part of this loan is means tested, so the total amount you'll get will depend on your family income. If you’re getting help through the maintenance grant, the maximum you can get from the maintenance loan is reduced.

For more information go to GOV.UK - Student Finance and Loans .

Choose the right student account

Although some come with tempting freebies, the interest-free overdraft is likely to be the most important feature of any student account. Some are much more generous than others, so make sure you compare what's on offer before making a decision.

Remember, however, that although a large overdraft limit may be appealing now, it will have to be paid back eventually. You should always stay within your overdraft limit too; otherwise you’ll be hit with steep unauthorised overdraft charges.

Check where the nearest branch of your bank is - some have special student branches on campus. You can find out which current accounts are the best available at the moment at MoneySupermarket.com - Compare Current Accounts .

Student credit cards

Many banks offer student credit cards, but these can come with steep interest charges and therefore ideally should be avoided unless you can pay off what you owe in full each month. Credit limits on these cards are generally relatively low, typically around £500, but once interest starts to mount up it can be easy for debts to spiral out of control.

If you do need to borrow money, your best option is to stick to using your student account overdraft which will be interest-free up to a certain limit.

Budgeting

It may sound boring, but writing a list of what is coming in and going out of your bank account is the best way to stay in control of your finances.

If you are living well beyond your means, look at ways in which you can cut costs. Take advantage of voucher codes and discounts wherever possible and use your NUS card to get money off when shopping.

Don't forget insurance

The average student carries many of their most expensive possessions with them every day, including items such as laptops, iPhones, MP3 players and digital cameras, so it's vital to take out adequate insurance to protect belongings.

One way of bringing down the cost of cover is for students to be added on to their parent's home contents policy. Parents should be aware however, that any claims made will directly impact their own claims history. This may lead to parents losing any no claims discount and result in increased premiums in the future, so it may be preferable to opt for a specialist student policy.

Boost your student income

Plenty of students work part time while studying to help cover living costs. Others get a temporary summer job before their course starts in the autumn. If you do plan to work over the next few months, make sure you don't pay more tax than you need to.

For example, if you work and pay tax during the year, but earn less than your personal allowance, which is £8,105 for the 2012-2013 tax year, then you could be eligible for a tax refund.

You can complete a P50 to claim a tax repayment if this is the case. You will need to send it to your tax office with your P45, which you should have been given by your employer when you finish your job. HM Revenue & Customs will send you any tax refund you're entitled to by post, as well as a new P45 form.