With September and the new academic year creeping closer, you might have children or grandchildren moving away to start university, begin an apprenticeship, or embark on a new career.
Flying the nest and getting to grips with “adulting” can be challenging. It may mean that some young adults will be managing their finances alone for the first time. Fortunately, there’s still time to help them prepare.
Is university the right option?
While uni is still the most popular choice (more than 2.86 million students went to university in 2022/23), there are an increasing number of apprenticeships and on-the-job training opportunities available[1].
So, a university degree may not be 100% necessary.
Key considerations
University
- Pick from thousands of courses
- A degree gives you multiple career opportunities
- Gain independence living away from home
- Develop soft skills you’ll be able to carry into any job
Apprenticeship
- Start work without delay
- Gain valuable on-the-job experience
- Earn money as you study
- No tuition fees
Here are some tips you could share with your children or grandchildren:
The financial picture
If you’re under 25 and choose an apprenticeship, training will be funded by your employer and the government.
Meanwhile, studying for a degree starting in 2024/25 will cost you £9,250 a year in tuition fees, plus additional living expenses[2]. As a result, you’ll almost certainly leave university with student debt. While you won’t have to repay this until you earn a specific salary, it’s worth weighing up if the cost and potential burden of debt will pay off in the long run[3].
Top financial tips if you’re committed to going to university
- Boss your budget
Knowing how to balance the budget is essential. Nailing this early will help you to keep track of your income and outgoings, and help prevent you from overspending.
- Add up your income – e.g. your student loan, money from your parents, or income from a job
- Subtract your essential outgoings – tuition fees, rent, food, household bills, phone bill etc
- Calculate any disposable income, available to spend on books or equipment for your course, music, social activities, or clothes.
Understanding the difference between essential payments and disposable cash is key. It’s also a really useful way to highlight the importance of distinguishing “wants” and “needs”.
- Have a back-up emergency fund
Unexpected events can happen at any time, so having an emergency fund – a pool of cash that you can call on in a crisis – is a crucial part of any financial plan.
It’s usually recommended that you have around three months’ worth of expenditure in an easy access account. This can provide a use useful buffer when unforeseen expenditure crops up.
If you don’t have an emergency fund right now, don’t panic. Instead, start thinking about how you can save a little money each month – you’ll be surprised how quickly even the smallest sums add up over time.
- Treat your credit card with care
If you get a credit card, think carefully about what this really means. While spending on a credit card can be helpful, it’s far from “free money”.
Be careful not to splurge and splash the cash.
Use your credit card to make small purchases, and then pay the balance off every month.
This will help you keep control of your spending and help to build your credit score.
- Make the most of student discounts
Student discounts could help you make substantial savings. From clothes and music subscriptions to meals out and car insurance, there are loads of companies offering money off – simply show your Totum card.
With discounts at cinemas, theatres, museums, and theme parks, you’ll be able to make the absolute most of your free time, and stay within your budget.
Get in touch
If your children or grandchildren are heading to university or about to start full-time work, sitting down for a chat with them and a financial planner could stand you in good stead. Email info.wp@titanwh.com or call us on 0800 048 0150.
Please note
The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.
[1] https://www.prospects.ac.uk/jobs-and-work-experience/apprenticeships/should-i-go-to-university-or-do-an-apprenticeship
[2] https://www.ucas.com/money-and-student-life/money/student-finance/undergraduate-tuition-fees-and-student-loans
[3] https://www.gov.uk/repaying-your-student-loan/when-you-start-repaying
