8 Smart Money Tips for Students During COVID-19

Coronavirus brought 2020 to a standstill. As lockdown began, the economy took a huge hit, holidays were cancelled, non-essential shops and restaurants were closed, and new social distancing rules made public transport largely off-limits.

For some students, unfortunately, that also meant losing part-time jobs. Although student loan payments continued as normal, without that extra income many students have struggled financially. In fact, a recent NUS report found that 80% of UK students are struggling financially due to COVID-19.

So, how can students best manage their money during this period? Here are eight top tips.

1. Check your direct debits to avoid unnecessary spending

Monitoring the money leaving your account each month is one of the simplest and most effective ways to cut spending.

Maybe you're still paying for a magazine subscription you never use. Maybe you meant to cancel an app payment after the free trial ended, but forgot. Or perhaps you can't remember whether you froze or cancelled your monthly gym membership.

You can see which direct debits are leaving your account through your online banking. Or try an app like smart-bill, which helps you find and cancel unwanted subscriptions and track your monthly spending. This is especially useful if you have multiple bank accounts.

Sometimes you can freeze payments for services you're not using right now, such as your gym membership. This may still cost you a monthly fee, but it will be lower than your usual rate. Then you can resume payments when things return to normal.

If you're missing your workouts, see how students are staying active during lockdown.

2. Use a money management app

When it comes to managing your money, online banking apps can save a lot of time. They can help you budget, save, and track your spending.

Monzo is a popular money management app. Known for its bright coral card, the bank makes it easy to separate your money into bills, savings, and spending. You can also set up savings pots with interest. If needed, you can arrange an overdraft of up to £500 and loans of up to £3,000.

Snoop is a free app that identifies ways to save money based on what you already do. It is authorised and regulated by the Financial Conduct Authority. The app also keeps a record of the shops you buy from and will let you know if there are any voucher codes available for next time.

Yolt gathers information from your bank accounts and displays your spending history on graphs so you can easily see where your money goes. It lets you get rewards from a range of retailers and can also compare your utilities and insurance providers to help you save.

3. Pay your credit card on time

If you don't pay off your credit card in full by the end of the month, you'll be charged interest on what you've spent on that card. If you withdraw cash with a credit card, you'll also be charged interest at a higher rate.

If you decide to make only the minimum repayment on your credit card, you'll still be charged compound interest on the remaining balance, which can have a negative impact on your credit score and make it harder to borrow money in future.

If you do need to borrow money, avoid using a credit card. A zero-interest overdraft is the better option.

4. Use your overdraft as a buffer

If you have a student account, you will usually get an interest-free overdraft. This can act as a quick buffer if needed. Make sure you check your overdraft limit, as well as whether you have zero-interest repayments. If you go over your overdraft limit, you'll be charged hefty fees.

Although your overdraft can be very useful at a time like this, when you suddenly no longer have your usual income, remember that it is a loan and must be repaid. After graduation, overdraft interest rates rise sharply, so make sure you repay it before then if you can.

If you can't repay your overdraft before graduating, many graduate accounts also offer zero-interest overdrafts, so see whether you can switch to a graduate account that offers one.

5. Cut back on entertainment spending

The days of going to the cinema and then ending the night with a few drinks at the local pub are well behind us. Coronavirus-friendly entertainment is generally centred around your favourite streaming services and, while less exciting in general, it can be a very effective way to save money.

Recreating restaurant food at home is a fun way to get creative and learn some new cooking skills. If you do decide to give in and order the occasional takeaway, though, you'll usually spend less than you would dining out, since you save on drinks.

If you're on a budget, here are 25 productive things to do while social distancing.

6. Be smart when shopping at the supermarket

Keeping supermarket trips within budget is fairly easy. Make a list of essentials before you go and make sure you stick to it. Remember to check your cupboards first so you know what you already have, and do your best to resist the extra items near the checkout.

Make sure you eat before you go to the shop. Going food shopping on an empty stomach is a sure way to overspend. You can also try shopping at lower-priced supermarkets that offer similar products for less.

When you're in the store, check the reduced section for items you can put in the freezer and eat later. Supermarkets often mark down products near closing time, which can be a great way to save money.

Try own-brand products, as you often can't tell the difference, and many are made in the same factories.

7. Make an emergency budget

To make an emergency budget, first note down any income you have, including maintenance loans, bursaries, and money from your parents. Then list everything you need to spend money on, such as rent, bills, travel, and so on. Compare this with your actual bank statements to see where your money is going.

If that sounds daunting, download one of the apps mentioned above, which will do most of the hard work for you.

Once you've identified your spending, you can start putting together an emergency monthly budget. Which of these are absolute necessities each month? Which can you do without? Be ruthless. Remember, this is your emergency budget, not your standard monthly budget.

Once you've done that, you'll have a plan to fall back on if your money starts to run out. It will also make you more aware of where you can cut back.

8. Check whether you're eligible for a larger student loan or bursary

If your parents' income has dropped by at least 15% since the start of the coronavirus crisis, you may be eligible for a larger student loan or bursary.

Usually, the amount of student finance you're eligible for is assessed using your parents' household income from two years ago, depending on when you started university.

If that has changed significantly, and you study in the UK, you can apply for a current year income assessment. You may then be able to receive the full amount you're entitled to, based on your household's current income.