Introduction
Shadi Kirk offers practical guidance for parents and grandparents preparing the next generation for financial independence. University is often a young person’s first step into adult life — and laying the foundations for good financial habits can make all the difference.
Supporting Students Beyond the Classroom
For many young people, heading off to university is both thrilling and daunting. It marks the start of a new chapter — one that includes academic challenges, social experiences, and, for the first time, financial independence. Covid-19 may have disrupted lecture halls and campus life, but it hasn’t altered the underlying reality: students must quickly learn how to manage their own money. With 79% of students admitting they worry about making ends meet, and 77% wishing they’d had better financial education before starting their course, it’s clear this is a knowledge gap worth closing. Whether you’re a parent or grandparent, there’s still time to make a real difference. Here are three practical financial lessons to pass on before term starts.
1. How to Create — and Stick to — a Student Budget
For many students, university is the first time they’ve needed to manage weekly expenses, juggle direct debits, and stretch a lump-sum loan over several months. Without a budget, it’s all too easy to overspend in the early weeks and find themselves short before term ends.
Student finance is typically paid in termly instalments. That means the full loan arrives at once — which can feel like a windfall, but needs to last until the next payment. Without a clear plan, temptation can lead to poor decisions: splurging on freshers’ week, eating out regularly, or overcommitting to social events.
Here’s where budgeting makes all the difference.
Sit down together and break down the basics:
- Fixed costs (e.g. accommodation, utilities, course materials)
- Variable costs (e.g. food, transport, entertainment)
- Savings goals (e.g. travel fund, emergency buffer)
Once essentials are accounted for, what’s left is weekly “spendable” money. Framing it this way helps students pace their spending and avoid running into the red too early.
The good news? Most student accommodation includes bills and is paid termly, which reduces complexity. But having visibility of outgoings — and the discipline to track spending — is key to staying in control.
“Budgeting isn’t about restricting enjoyment. It’s about giving students the freedom to make informed choices, so they can enjoy university life without the financial hangover.”
— Angus Kirk, Independent Financial Planner, Transform FP
2. How Overdrafts Work — and Why They’re Not Free Money
Student bank accounts often come with a 0% interest overdraft, making them an attractive safety net. These overdrafts can be as high as £3,000 by the third year, and many banks offer additional perks like free railcards or cashback schemes.
Used wisely, a student overdraft can smooth out cashflow issues. Used poorly, it can become a long-term financial burden.
A study by the Money Advice Service (now Money & Pensions Service) found that 4 in 10 students had exceeded their overdraft limit or used an unauthorised overdraft, triggering penalty fees and credit score damage.
It’s important students understand that:
- An overdraft is borrowed money, not “extra” funds
- Exceeding limits can lead to fees and affect future borrowing
- After graduation, interest is usually added, and repayment terms begin
When choosing a student account, it’s worth comparing what happens after university. Some banks offer grace periods or gradually reduce the overdraft limit to help graduates repay without pressure.
Remind them: overdrafts are best used for occasional shortfalls, not regular spending.
“An overdraft can be helpful in moderation. But if a student’s living in it constantly, that’s not budgeting — that’s surviving on credit. We help families spot the warning signs early.”
— Angus Kirk, Independent Financial Planner, Transform FP
3. What to Know Before Using a Credit Card
Credit cards are often marketed to young people — even students — and the allure of a flexible spending limit can be strong.
The good news is that most students are cautious. Only 14% say they would turn to a credit card in a financial pinch. But for those who do, understanding the risks is essential.
The pitfalls include:
- Missing a payment, which can damage your credit rating
- Overspending and falling into debt
- Paying high interest if the balance isn’t cleared monthly
In 2018, the Money Advice Service (now Money & Pensions Service) found 176,000 students had missed credit card or bill payments for three months or more — harming their financial standing for years to come.
Discussing how credit cards work, what interest actually costs, and how repayment behaviour shapes a credit score can help students make informed choices. A credit card isn’t necessarily a bad tool — but it needs a plan behind it.
Beyond the Basics: Building Healthy Financial Habits for Life
University isn’t just a place for academic growth. It’s where many young people develop lifelong money habits — for better or worse.
Helping your child or grandchild build a financial toolkit doesn’t have to stop with budgeting, overdrafts, and credit cards. You can also introduce conversations around:
- Emergency savings
- Student discounts and savvy spending
- Managing part-time income
- Understanding debt vs investment
- Planning for life after graduation
Most importantly, keep the conversation open. Let them know they can come to you with questions — without judgement.
Thinking of Offering Financial Support? Let’s Make It Work for You
If you’re planning to support your child or grandchild financially through university, you’re not alone. Many families offer help — whether through regular allowances, covering accommodation, or funding key purchases like laptops or travel.
But the big question is always: what’s affordable and sustainable?
A financial planner can help you:
- Understand how much you can realistically gift
- Choose the most tax-efficient way to provide support
- Balance generosity with your own financial security
- Explore long-term strategies for education funding or property deposits
Whether it’s helping now or financial planning for the future, we can help you support the next generation with clarity and confidence. Get in touch today.
Important disclaimer: This article is for general information only and does not constitute financial advice. The information is aimed at retail clients only. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing. We recommend that you speak to a qualified financial planner for advice tailored to your individual circumstances and goals.
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