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Student Finances and Budgeting

Yawn. This is what you might think when we start discussing budgeting, but do not be mistaken, ensuring that you manage your finances effectively can make the difference between completing your degree or diploma with the rest of your friends and dropping out of university on your own because you couldn’t afford to feed yourself.

Some students are more fortunate than others and will be receiving financial help from family or funds. Others will be borrowing the largest sums of money that they have ever borrowed so far in their lives (and just wait until you get a mortgage!), accruing debts that will last for years after graduation. It took me almost 8 years to finish repaying my Student Loan! Whilst the repayment of any long term, low interest loans such as Student Loans may be at the deepest depths of your mind right now, you’d be doing yourself a favour by reminding yourself when you’re trying to decide between the Gucci sunglasses or the Prada bag.

Do you know how much money you have as income each month? Do you know exactly how much you spend on the essentials like food and accommodation? Let’s face it, most people reading this will not have a detailed breakdown of their incomings and outgoings. Even if you have a budget set out, do you stick to it?

Okay. Let’s presume that you’re leaving home and are university bound, ready to take on the world. Now let’s discuss how to make sure your finances don’t prevent you from staying there!

Setting a budget is not a difficult thing to do. If you’ve got access to a spreadsheet application then great. If all you’ve got is an A4 pad from the Stationery Box then don’t worry. Creating the budget plan is the easy part. Being disciplined enough to stay within it is the hard part. If you haven’t tasted university life yet then you may not understand, but once you start buying books, meeting people and going out then you will thank me for taking you through this (I happily accept most major credit cards and beer vouchers through the post!).

Firstly, some thinking. Determine exactly how much money you’re going to be receiving each month (doing it monthly gives us more meaningful numbers and allows for weekly fluctuations). Whether it be from a loan, savings, or family, just come up with a ballpark figure. Then create a list of all the things you think you’ll be spending on in any given month. At this point, it’s worth asking someone who owns their own house what they have to spend on. Try your parents as they’re more than likely willing to make you feel guilty about how much time you spend on the phone or how much more it costs them when you don’t switch off the lights.

Here’s a sample list of things for you to consider. Note that we’re not providing any figures because these can vary greatly from person-to-person and different locations.

Incoming

  1. Student Loan
  2. Family contribution
  3. Wages
  4. Other

Outgoing

  1. Tuition fees
  2. Accommodation fees
  3. Electricity
  4. Gas
  5. Water
  6. Landline telephone
  7. Mobile telephone
  8. TV licence
  9. Insurance
  10. Transport (if you are taking your own car then break this down further e.g. petrol, road tax, insurance)
  11. Toiletries
  12. Laundry expenses
  13. Clothing
  14. Course books
  15. Internet connection
  16. Entertainment (think about all of the things you do for fun e.g. cinema, booze, clubbing, magazines, cigarettes)

Once you have your list, input it into your spreadsheet or pad and starting assigning some values to them. Sum up your expected outgoings and subtract them from your incoming. Hopefully, you’ll have a positive number left over. If not, then it’s time to start pruning that outgoings list and dropping what you can or start thinking about earning some extra money from a part time job.

If you’re already working and still feel uncomfortable about your finances then try speaking to your Student Welfare Officer. They might be able to give you specific advice about your given situation. It’s also worth speaking to your bank’s student advisor as they will often arrange for things like interest free overdrafts.

A general word about credit cards. It’s more than likely you’ll open a student bank account once you start your course. There are many benefits to be had including free banking, interest free overdrafts, cheque book, debit card, free advice, pens, balloons… So it makes good sense to do so. Often, banks will also start to offer you credit cards and these can be a mixed blessing depending on how you use them. They’re often fee-free and may come with perks such as redeemable points or free insurance. They can also be a good way to start a credit file on yourself so that when you come to request a large loan e.g. mortgage then the lender will have some frame of reference to look back upon. Of course, this can be a bad thing if you default a lot and never meet your minimum repayments. If you can use them sensibly i.e. only use them to buy things that you can afford so that you pay off the full balance each month. Be aware that it becomes all to easy to start maintaining a balance on your credit cards. As a result, you’ll start paying interest at relatively high rates.

Whatever you do, don’t take the hiding-under-the-blanket-will-make-it-go-away approach because racking up huge amounts of debt now will come back to haunt you at some later date. Of course, I want you to enjoy yourself, but just be aware of your (financial) limits!

Rural Finance and Rural Credit

In a densely populated, metropolitan landscape it can be easy to forget that the majority of India is rural. Finance companies have recognised the distinctive needs of pastoral India and designed schemes exclusively for this sector.

Rural finance is a line of credit specifically intended for the requirements of the agricultural industry. Ranging from mortgage assistance to land development and farming equipment, these credit plans are a significant aspect of rural and semi-urban support. In a country like India, where agriculture continues to play a central role, farming finance is a service closely related to the continued progress of the country.

A number of banks and finance companies have begun to specialise in offering credit to farmers. Appreciated as a key impetus in poverty reduction, this type of support can greatly assist regional development and growth. The creation of a business model that takes the unique needs of non-urban India into account, along with the unique challenges, is the key to success for companies working within this field.

The customer seeking rural credit is often at a lower position on the economic scale. Agricultural assistance must concentrate more on future earning power than the borrower’s current position. As with any loan, the lender should reasonably demonstrate a capacity to repay the amount borrowed, but in the case of credit for farmers, providers are often dealing with lower income groups. Understanding this customer is essential.

Finance in this sector has the added benefit of supporting further work in regional areas. As banks and financial services continue to extend their services into rural India they are generating employment in the vicinity. This employment ensures that customers can relate to the local face of the institution. It also represents a significant basis for skill development.

The conditions surrounding rural business are never constant. Ruined crops, bad monsoon seasons and natural disasters are just some of the ever present, largely uncontrollable factors. Those offering services in this area must commit to supporting their customers through both turbulent and growth patch of time. If this can be achieved, rural finance has a huge market to work in.