Tips to keep students out of the red

HIGH TIME: Students need to work, have a good time, and not break the bank doing so.
HIGH TIME: Students need to work, have a good time, and not break the bank doing so.

Banks are competing for students to join them with tertiary packages including interest-free (but not fee-free) overdrafts, credit cards with annual fees waived, and competition give-aways.

KiwiBank, for example, is running a prize draw giving away 10 lots of $200 to students who join up before the end of March, while Westpac has three lots of $1000 to give away, plus three full-sized thrones.

While the tertiary packages on offer have modest differences, the way students run their own finances will have a much bigger impact on their financial health. And this year, to help its newbie students find their feet and steer a steady financial course, Victoria University has published the Financial Survival Guide.

Here are the university's top 20 tips:

1 Anticipate your costs. Create a budget using a template (Victoria University has one), which anticipates weekly spending needs, and then work out the income needed and where it will come from.

2 Don't use overdrafts to enhance your social life. Keep them for short-term cash-flow crunches.

3 Take it easy in the first year. As one student put it: "In my first year of study I had a lot of money and didn't need to worry. I spent all my savings carelessly and now have a tighter budget to be able to pay all my costs."

4 Don't bank blind. Know your balance! If you don't have sufficient funds it will cost you dearly in dishonour fees ($15 to $20) and unarranged overdraft fees ($15 to $20) . Use text alerts and mobile banking to keep track of balances.

5 Beware the dangers of eftpos. Eftpos is a terrible thing when it comes to controlling your spending or sticking to budget. Know what you spend.

6 Get a hard limit: Ask to have a "hard limit" on your account otherwise, you could accidentally go $300 into overdraft without realising and incur fees.

7 Avoid credit card debt. This is expensive debt. Credit cards should always be avoided.

8 Beware ATM costs. There is a charge for using other banks' cash machines, though there are exceptions - KiwiBank doesn't charge extra for its student customers using other banks' campus ATMs.

9 Flatting can be a minefield. You need a flat account and a system to ensure everybody is paying their way. Victoria University recommends weekly payments into the account with automatic payments going to the landlord.

10 Monitor the flat account carefully. There have been cases of light-fingered flatmates pilfering money.

11 Take care around bonds. Should you move into a flat and pay bond to the person moving out. That leaves them with no guarantee of getting the bond back. Make sure you get a written receipt.

12 Controlling power bills. Make sure the meter is being regularly read as estimates can be misleading and lead to trouble later. Set money aside each week in the flat account to pay it.

13 Consider contents insurance. Not only can it mean being able to replace stolen items, it usually has liability cover, which pays for damage you accidentally do to other people's property.

14 Operate as though you are a business. Pay accounts when they fall due and make sure the flat account is not falling behind.

15 Pre-load the bank account. Work and save before university starts if you can. Also, work when it's available even if you don't need the money right then. Cash reserves help.

16 Universities can help people to find work. Take advantage of this. They can also help you to understand how to deal with the IRD, and for those getting student allowances, to not work more than allowed.

17 Keep the student loan to a minimum. Avoid the temptation to take the maximum when you don't need it. As one student writes: "Despite what everyone else is doing, use your course-related costs for things that are actually course-related. It's an easy $1000 debt you can avoid if you don't use it for personal things like going to concerts or buying alcohol."

18 Live at home. If you live at home and don't have to pay board, don't claim the costs of living on the student loan.

19 Food advice. Avoid takeaways, dairies and eating on campus. Instead, take your lunch. Stick to essentials at the supermarket. "Shop at the vege markets and learn to cook."

20 Ask for help. It's likely there are advisers to help and there can be grants available to students who run into trouble.

Sunday Star Times