Personal Finance: Don't forget your toothbrush when budgeting

In the third and final in our series on student finance, John Andrew has some tips for this autumn's freshers

If you are entering university this term, it is probably the first time that you have been in complete control of your finances. True, you may have had an allowance from your parents, which you supplemented with part-time earnings, but shortly you will be responsible for your entire budget.

You may have given some thought to your proposed new lifestyle. Student life is exciting and attractive. There will be new-found freedom away from the family home: no parents to tell you what, or what not, to do. University, of course, is not just about obtaining an academic qualification. It is also about experiencing life.

One of your early experiences could well be the "toothpaste syndrome". Basically it can be anything which at home is automatically provided free of charge, which you will now have to buy yourself.

One of the costs of your freedom from parental supervision is that you are on your own to manage not only your time, but also all the financial aspects of life.

By now you should know the amount of money you will have at your disposal: student loan, contribution from your parents and any savings you may have. You will also know how much you are expected to contribute to your tuition fees.

Estimate your likely outgoings from accommodation to living expenses. Slowly you will be able to fit together all the pieces of your jigsaw and your complete financial picture - your budget - will emerge.

One item that is easy to forget is insurance. Before you dismiss this with a shrug and think you have nothing of value, just do a quick calculation of the cost of replacing the possessions you will be taking with you. Undoubtedly you will be surprised at the total value.

To forgo cover is a false economy, for student accommodation attracts thieves. It is worth checking to see if you are covered under your parents' home contents policy. While some hall fees may include insurance of your worldly goods, the private sector most definitely will not. Do shop around for the best deal as premiums vary greatly. Get a quote from your bank as well as from a specialist insurer such as Endsleigh.

Inevitably your largest expenditure will be at the beginning of term. What happens if your loan payment is late and your parents are paying you a monthly allowance?

Although this crisis will be new to you, stay calm and do not panic. If you are in university accommodation, you may be able to delay paying your rent as well as your tuition fees until your funds arrive. Private landlords are usually not so understanding, but there is no harm in asking.

Total all the expenditure you will have to make over the next couple of weeks - do not forget an element for living expenses - and deduct the money you have to hand. The shortfall will be the amount of overdraft you need to request from your bank. Although banks include a free overdraft as part of their student packages, it is essential that you arrange to overdraw before you dip into the red.

Always think before you spend. Try and only make cash machine withdrawals once a week and then only from machines where you incur no charges. Should you have a credit card, think before you use it and keep a running total of your spending so it does not get out of hand.

TEN TIPS FOR NEW STUDENTS

1Budgeting is the key to avoiding financial headaches, so monitor your finances and revise your plans when you are heading off-course. In the first few weeks it is a good idea to jot down all your expenditure on a daily basis so you can see where the money is going.

2If you plan to get a part-time job, do not over-commit yourself to undertaking an unreasonable amount of hours. The sooner you start looking for a job the better your chances of success.

3It is not necessary to buy every book on a reading list. Ask your course tutor or last year's students which are the really essential buys. You will save money buying secondhand.

4Self-catering is cheaper than eating out, even on campus. It is even cheaper for groups of friends to pool resources and eat together.

5While it is tempting to join every club and society that remotely interests you, your time for recreation has limits. Paying subscriptions to join organisations you will never attend is a waste of money.

6 Credit cards can ruin your wealth, but used wisely they can assist your cash flow. Settle the bill each month, even if you have to arrange to overdraw your current account, as it is a less costly way of borrowing.

7Supermarket-own brands and markets are cheaper than corner shops. Look out for special offers.

8Financial problems are emotionally draining and your work and health will suffer. Don't bury your head in the sand - seek help sooner rather than later.

9Take full advantage of the concessions available to students.

10Freshers' Week is a time for socialising, but watch your spending if your budget is very tight.