How to become Rich: Student

If this is the first article that you're reading in the How to become Rich series then I encourage you to go back and read The Basics first.

Student Financials

A student is currently investing in themselves. By educating themselves they are trying to raise their future annual earnings, as on average, graduates earn more than school leavers (although there have been plenty of millionaires who did not go to school). As such, a student is delaying earnings now so that they can earn much greater amounts in the future (and also so that they can have a great time drinking at university).

Most students nowadays get a loan from the Government to help cover their living costs. The maintenance loan for living can work out at about £9,000 per year.

Students also take out a loan to cover the cost of education. Whilst there are some caveats to the loan before you have to pay it back, (eg you will pay back 9% of any income over £21,000 per year) the loan generally means that students will start their working life with debt. There are several strategies for dealing with that debt which we will come on to.

Building Habits

Attending a University is usually the first time a person has become independent. As such it is an extremely important time to start developing good financial habits that could affect how you run your finances in the future.

As mentioned in How to become Rich: The Basics you should always be saving. Even though money is in short supply at this stage if life, with much of it coming from loans, savings, part time jobs or the Bank of Mum and Dad, saving, as always, should be a priority.

Set up a standing order from your current account to your savings account on the 1st if every month. Even if it's just £20, it's better than nothing! Furthermore, each term you could try to increase it by £10. The point is to save something! You're building up good habits for the future.

Another good habit to get into is to start to learn how to budget. There are two ways of doing this. One traditional method is to allocate your maintenance loan/ other forms of financing to various pots each month. For example, you make an estimation for food for the month and mentally set that money aside. You could also set aside funds for going out, entertainment, travel etc. Furthermore, you implement your budgeting plan by being disciplined to stick to your budget, spending only what was allocated in the various pots. Alternatively, I prefer to keep a spreadsheet where I record all my spending for the month. You are able to see where you are overspending and can then cutback accordingly. I believe my method to be a little more flexible than the traditional budgeting method. I explain my budgeting method in more detail in a previous article Budgeting Revisited.

Now onto one habit to avoid: Do not use your overdraft. For the majority of students use of an overdraft is interest free. In my opinion this is so that the banks can encourage you to get into bad habits, utilizing your overdraft when you are no longer a student and paying vast amounts of interest for the privilege. So, don't use your overdraft. Ever! Period! You do not want to get into the mindset where it feels acceptable. Furthermore, many people do not realise that using your overdraft shows up on your credit score (Why do I need a good credit score?). You can actually improve your credit history by demonstrating that you never have to use your overdraft. It demonstrates good financial discipline.

Part time job

To reduce your reliance on the student loan, make budgeting easier and increase your savings I would recommend two things. Try to make some extra money at University and get a summer job/ (paid - ideally) internship.

Regardless of what many students claim, students tend to have a lot of spare time. Furthermore, there are loads of opportunities at your University to make some extra cash. For example, working in a cafe, restaurant, shop, for a nightclub, for the University itself. I chose to sell tickets for a club and start a website to bring in extra cash each month.

The summer holidays for most University courses are incredibly long - almost 4 months. That is more than enough time to go for a holiday and to get a summer job - What else are you going to do!?

You could also consider selling your essays, once you have finished University. Here's an article on one of the ways that I did this: Selling your Essays.

Take advantage of deals

Students have access to many deals and vouchers that most people cannot get. Make sure that you are taking full advantage:

  • Sign up to voucher sites and student deals pages such as StudentBeans
  • Get yourself a student railcard - it gets you 30% off future rail travel.
  • Get yourself an NUS card to get money off in loads of restaurants and shops
  • Carry your student card whenever you go out and ask whatever shop/ restaurant/ venue that you are in has any student deals - you don't get if you don't ask!


Academic books are notoriously expensive. Plus, you may have to buy many of them each year. Rather than buying brand new books here are some alternatives:

  • Borrow them from the library - you may not use the books as much as you had originally thought
  • Search for an online free version on search engines such as Google Scholar or on your course's webpages
  • Buy a second hand version of the book off eBay or Amazon
  • Check your society or course notice boards to see if anyone in the year above is selling the book
  • Make sure that you sell your books at the end of each year if you aren't going to need them again. Check out an article I wrote on how to Sell your student books

Going out

The biggest key to saving money when going out is to THE PRE-DRINK. For those of you who don't know, predrinking is where you buy a large bottle of alcohol between a few students and drink heavily before the club - saving you from spending money on drinks in the club. Other hints to save money when going out:

  • Share taxis to and from the club
  • Consider a nightbus home - most Universities provide this for their students
  • Consider working for a club - that way you get free entry and potentially drinks

Dealing with student debt

Now this is a tricky one. If you know that you will be earning well in excess of the £21,000 over the course of your working life then it is a good idea to try to pay down your student debt as quickly as possible. Many people believe that student debt is interest free. This is a misconception. You pay interest indirectly as the debt principle is index linked to inflation. As such, you will actually pay less the quicker you pay off the debt.

However, if you don't think you'll earn much over £21,000 over the course of your life then it may not be economical for you to pay off the debt as quickly as possible. Any remaining student debt gets written off 30 years after you began your working life. As such, if it was the case that you didn't earn a lot, and would have still had some debt to pay off in 30 years time then it would not have been economically efficient for you to pay off the debt as quickly as possible.

Whether to pay off the debt as quickly as possible or not is a totally individual question. However, I would point out, (apologies for the slightly political comment to come) that if you are NOT going to seriously boost your earnings power as a result of going to University to well over £21,000, then it is probably not worth your time or money or the debt to go to University. As such, you would probably be more financially successful, not going to University, earning slightly less but not being shackled by any student debt.

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1 comment

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