How to Budget to pay for University

If you have children, then perhaps as soon as they are born you might start to worry about the cost of university. As they get older that worry may get more real, particularly if they start to show the potential for being able to go to university. Parents may be aware of the student loan system, the costs of university and things like that and they will also be aware that their generation did not have to pay, which can make the prospect of paying for it scary for many. However, there are ways that you should be able to manage.

Student Loans

A student loan will be available for every student to pay their university fees assuming they have not had one before. This means that you will not have to find this money right away. They will be responsible for making repayments which will be means tested according to how much they earn. This means that parents need not worry so much about this as they will not have to pay for it. They may be concerned about the cost for their children, but it should not have a significant impact as it will come out of their tax code and they may not have to pay it all back as it is written off after a number of decades. The maintenance loan can be more of an issue. This loan is used to cover the costs of accommodation, food and other living expenses and is means tested according to parental income. This means that higher earning parents will be expected to give their children the money for this rather than them being able to borrow the money. Parents will therefore have to consider the costs of this.

Although the parents are paying living expenses for the child before they start university; paying for their food, clothes and things like this, so will be able to just spend the same on this, they will also need to find the money to cover their rent and utilities. This could add up to quite a lot of money and if the parent has more than one child at university at once, then this means they will need to find a lot of money all in one go. This will also happen at a time when child benefits and child tax credits are likely to be stopped, assuming the parents are getting these.

Budgeting

Therefore parents will need to think about where they will get this money from. They should be aware of whether they will be considered to be high earners or not and if they are not, there is a calculator on the government website that can be used to work it all out. It will tell you how much student maintenance loan your child will be eligible for so that you will be able to work out how much you will need to come up with. You will also need some idea of how much rent and other living expenses will be, which you should also be able to calculate. Once you have this figure you will know how much you will need to save up each month in order to have enough money to give to your child. If you start saving when your child is younger, then you will not have to save up so much each month. However, you may want to wait until you are sure that they are going. However, there is no harm in saving as you can always give them the money to use for other things such as the deposit on a home, a car and driving lessons or things like this. It will certainly not be a waste of time.

Of course, in order to save money you may have to cut back on things or earn more. You will need to take a look at your current financial situation and consider whether this will be the case. If you are already saving significant chunks of money, then this might be enough so you need not make any changes. However, if you feel that you need to be saving more, then you will need to look at how you can change your lifestyle in order to get more money that you can save. This is something that can be achieved in different ways.

It is wise to set a budget so that you know what you can spend. Assign money to each area where you have to spend money, including saving for university and then what is left is all you can spend on luxuries. You can work out the figures by looking at what you are spending on things now. If there is not enough money available then you will need to look at ways of increasing your income which could include encouraging your child to get a part-time job so that they can contribute as well.