10 vital money lessons you should have been taught in school

For many of us, school involved too many quadratic equations and not enough about personal finance. Here are the money lessons they should have taught us instead.

Bizarrely, financial education has only been a compulsory part of the national curriculum since 2014 – too little too late for a lot of current uni students already reeling from £9,000+ tuition fees and complicated Student Loan terms.

Our National Student Money Survey revealed that as many as two in five students in the UK don’t understand their Student Loan agreement, and almost three quarters have said they didn’t get enough financial education in school.

With today’s young people facing a tough economic climate, a tricky housing market and student debt, it’s more important than ever to learn about money.

We asked Save the Student readers what they wished they’d learnt about personal finance as teenagers, and here’s what they said…

10 personal finance skills schools should teach

How to make money last

If you’re having trouble making ends meet, it effectively boils down to earning more or spending less.

However tempting it is to go on a massive shopping spree as soon as your Student Loan or wages drop, it’s crucial that you work out your disposable income first. Paying the rent and setting aside cash for bills doesn’t take long, and once that’s sorted, you’ll have a much clearer idea of what’s available to spend.

App-based bank accounts can be a great way of keeping track of your money and knowing how much you have left to splash.

Saying that, try to avoid any impulse purchases, be aware of the tricks used by supermarkets to make you spend more cash and take time to consider (and save towards) exciting big-ticket purchases, such as a new laptop or a summer holiday.

How much money do you need to get by?

There’s no clear-cut answer to how much money you need to live off – the cash you need to get by in London will be very different from the amount you’d need in Leeds (hence why Maintenance Loans vary depending on your situation).

We’ve actually found out the average amount that students at each UK university spend each month and what they’re spending it on – use this as a guide for what you can expect to be spending, but always try to cut back where possible.

The first step to working out how much you’ll personally need is by working out a budget. Follow our budgeting steps and download our nifty spreadsheet to give you a clear idea of what your outgoings are.

The aim of the game is to avoid nasty surprises by planning ahead. Got Mum’s big birthday coming up? Pop it in your spreadsheet, set a reminder on your phone and start saving for her present now.

Building up a contingency fund is also a bonus for unexpected costs, such as last-minute group holidays or fixing another broken phone screen.

How to haggle

There’s no shame in haggling to get the best deal when you’re buying something. What better way to convince a seller to lower their price than the fact you’re living off a Student Loan?

But, unless you’ve got years of experience as a market trader, you probably weren’t taught how to barter like Del Boy in school. Thankfully, we’ve got a really useful guide to haggling like a pro. Get practising!

While you should always ask for a student discount (even if it’s not advertised), the opportunities for a bit of bargaining are endless. For example, head to a farmers’ market towards the end of the day and take home some gourmet stock for less than you’d fork out on Tesco Value.

One of the best opportunities for haggling is when your mobile phone contract is about a month or two away from expiring.

Just ring up, ask for the cancellation department, pretend you want to leave them and turn on the charm. Free texts, extra data, a better phone and cheaper plans are all achievable with determination and patience.

The real dangers of debt

Some debt is unavoidable (and even necessary).

For most students, going to university would be impossible without incurring debt from tuition fees and Maintenance Loans – and despite some of the scare stories, Student Loan repayments are actually achievable, easy and always in line with how much you’re earning.

However, some types of debt can be quite dangerous if you’re not careful.

Credit card debt can spiral out of control if you don’t keep on top of repayments, while predatory payday loans come with astronomically high interest rates and should always be avoided. The consequences can be devastating, as we found out when we interviewed a man who ended up in £26,000 of payday loan debt.

Private loans also come with risks – you might come across some that are aimed at students that look tempting, but it’s important to look into alternative forms of funding first.

For more in-depth advice, have a read of our guide to managing debt at university.

How to improve your credit score

When you apply for most financial products (things like credit cards and bank overdrafts, where you essentially ‘purchase’ money), lenders will run a credit check on you to calculate their risk.

Credit checks are done based on reports of your borrowing history, managed by a small number of credit referencing agencies.

From your credit score, lenders will decide the likelihood that you‘ll be able to repay what you borrow.

A poor credit score can affect your chances of getting a mortgage later in life, renting a house, or even just getting a mobile phone contract. Every time you get declined for something because of your bad credit, it will remain as a ‘black mark’ on your report for seven years.

Think twice before applying for financial products (do you really need another credit card?), and always make your repayments on time.

It is possible to check your credit reports to see how you’re fairing and to scope out inaccuracies and fraud. One of the top credit rating companies offers them free of charge – ideal!

How interest rates work

Interest rates for the whole of the UK are set by the Bank of England and commercial banks, with the former setting the ‘base rate’ and the latter adding more depending on the service offered and how generous they’re feeling.

Generally speaking, interest rates in the UK are currently at an all-time low due to the financial impact of the coronavirus pandemic. Increasing the base rate would be harder on borrowers (not the tiny people from the film), but great for savers.

As an example of how interest rates can work, someone with £20,000 of savings might earn 3% interest on top of their cash every year, while a shopaholic maxed-out on their credit card with a £3,000 limit could be paying 20% interest on the money they’ve borrowed.

Some credit cards, overdrafts and mortgages often advertise low-interest rates, but there’s no guarantee you’ll get these deals. That’s because the best rates are usually reserved for people with the highest credit scores.

The reasons to have a credit card

There are plenty of potential pitfalls to owning a credit card, for sure.

Not least is the danger of a debt spiral if you don’t keep on top of things: you should never have a credit card if you think there’s a chance you might not be able to afford the repayments, including added interest.

However, when used in the right way, credit cards can be quite beneficial. Being a responsible credit card user is one of the easiest ways to build up a good credit rating, as it’s the most straightforward way of showing you know how to pay up on time.

Every credit card is different but, generally, they can help you make bigger purchases when you know you can’t afford to pay up in one go, but will definitely be able to pay off in instalments at the end of each month.

If you’ve got the self-discipline to settle in full (not just the minimum payment) when the bill arrives, you typically won’t pay any interest on the purchases you’ve made, either.

There are also a few perks for credit card customers out there, such as air miles to put towards a holiday, cheaper currency exchangecashback and fraud protection. However, you shouldn’t choose a credit card based on the benefits alone, or you could quickly find yourself paying over-the-odds just so you can build up your miles for a holiday.

A lot of credit cards offer 0% interest for a certain period of time when you first get your card. Some savvy people regularly switch between banks and credit card offers to take advantage of the perks, freebies and 0%-interest period on offer.

How to shop around for the best deal

Although it might sound pretty boring, making the right choice when it comes to car insuranceenergy billssavings and investments, and even which which student bank account is best, really do matter.

For example, do you know how long your arranged fee- and interest-free student overdraft is available for, and how soon after graduation you’ll have to start paying it back?

Plus, do you know what the penalties tied to your unarranged overdraft are? Or when your savings account will drop to a measly 0.09% interest?

So many students we speak to stay loyal to their bank just to ‘keep things simple’, but the truth is this could be costing you big time. We’d recommend keeping an eye out online for the best deals going on accounts, and switching banks whenever you see a better offer pop up.

Banks even offer hassle-free switching (where they change over all your standing orders so you don’t have to organise it yourself) and cash incentives to encourage you to switch! Read our guide to the best student bank accounts for all the info you need.

Don’t trust everything adverts tell you

If an advert is promoting something as ‘free’, you’d assume it would, in fact, be free… right? Well, unfortunately, this isn’t always the case.

The ASA (Advertising Standards Authority) is often calling out businesses for misrepresentation in their ads, such as when broadband providers mislead customers.

Be particularly wary of multi-buy offers – not only will you often end up with loads of one product you probably didn’t want much of in the first place, but this is also one of the dirty supermarket tricks they use to get you to spend more money.

What to look for in your bank statements

As painful as this may be, it’s important you get into the habit of checking your bank statements regularly if you want to avoid unexpected charges, wasting money or being fleeced.

This includes your current account, savings accounts, and (most importantly) credit cards. With most banks and building societies now operating online, keeping an eye on your money is as easy as surfing their site or opening an app.

You’ve heard this all before, but we’ll say it again: it’s totally crucial to keep on top of debts. Going beyond your 0% overdraft limit or delaying a credit card payment can lead to nasty charges (and a knock to your credit rating).

Regular check-ins are vital to keep tabs on any payments you’re expected to make (and penalties for missing them), any interest you’re earning, and for weeding out Direct Debits or subscriptions you can ditch.

And, if you spot any charges for things you don’t remember buying yourself, get on to the bank pronto!

Keeping an eye on statements also shows you month-on-month whether you’re balancing your books effectively or heading in a dangerous direction.

If you’re nudging the red more often than you’d like, this is where you can see where you’re overspending and take steps to rein it in.

The magic of compound interest

Compound interest is a powerful thing – it just depends on which side of the calculator you’re sitting.

This interest-ing (sorry) concept can grow the money you start out with faster than expected, but it makes it harder to clear any money you owe. Why? Because compound interest multiplies over time by adding interest on top of interest.