As September approaches, you might be getting ready to send your teen off to university for the very first time.
While helping them master essential life skills like cooking and cleaning is important, preparing them to manage their money independently could be even more valuable.
“For a lot of young students that go to university, it’s the first time they’ve ever had to deal with money independently, and it’s not easy,” says Jake Butler, student money expert at Save the Student.
open image in gallery“When loans first appear in their bank accounts, they often have never seen that type of money before, so it’s easy for them to think it’s endless and go on a spending spree.”
Here are six essential money lessons to teach your teen before they flee the nest to help them build healthy financial habits at university from day one…
1. How to budget
open image in gallery“Budgeting is always at the basis of financial learning,” says Butler.
One of the best ways to get started is with a simple spreadsheet.
“Keeping it simple is best,” recommends Butler. “Document what their incomings and outgoings are, and then they can find their shortfall at the end of each month.”
He adds that app-based banks like Monzo and Starling offer useful budgeting tools. “They are great for tracking spending without having to do much work,” says Butler.
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Try to explain what the large maintenance loan payments needs to cover, and how long it needs to last for.
“Depending on how much funding they are eligible for, they could get a few thousand pounds in their account at the start of the term, and it’s important to teach them that it has to cover accommodation, food and living,” says Butler.
“When they get their loan payment at the start of each term, advise them to split it up into monthly amounts.”
2. Plan beyond borrowing
“For the majority of students, the maintenance loan won’t cover what is needed to get by. Our National Student Money Survey 2025 found that the average maintenance loan from the government will leave a student around £500 a month short,” says Butler, advising parents to factor in discussions around bridging the gap.
“The survey also found that around 52% of students will have help from their parents and around 58% have to get a part-time job at some point during university.”
3. Loans need to be repaid
open image in galleryEducating students on how loans have to be repaid at the end of their studies is crucial.
“Firstly, interest rates are applied to student loans based on the Retail Price Index (RPI), which increases the final amount,” explains Butler.
“Then, if you’re lucky enough to get a graduate job, your repayments will start from April after you graduate. Once you earn over £25,000 a year, you have to start making repayments. They are 9% of anything you earn over your plan threshold.”
4. Don’t live outside of your means
“Borrowing to live outside of their means is stealing from their future,” says Butler.
Educating children on responsible borrowing is also important.
“Teach them how credit cards work and that, if used correctly, how it can help them build their credit score. Also, help them understand that it isn’t free money and that it should be paid off in full every month,” advises Butler.
Buy Now, Pay Later schemes like Klarna might seem good in theory but Butler warns that it can encourage overspending.
“Retailers pay the likes of Klarna to be featured on their website because they know that it increases the amount that someone spends in the checkout,” says Butler.
Subscriptions can also be problematic.
“If students sign up for three or four subscriptions, they are going to have that money coming out of their account monthly, so teaching them how to read the small print and how to set reminders to cancel stuff like that is useful,” recommends Butler.
5. Normalise money talk
open image in galleryWhile people can feel uncomfortable talking about money, Butler says it’s important for parents to these conversations with their children.
“The main reason parents should do this is so that their child doesn’t bury their head in the sand [about money]. Some students get into debt because they think ‘I’ll deal with that another time’,” notes Butler.
“If parents are very open and honest with their children about all aspects of money, then it means that those conversations can happen and they can help them with any situation that arises.”
6. Look for deals
There are lots of websites geared towards saving students money, like Student Beans and UNiDAYS.
“Tell your children to sign up to those straight away,” advises Butler.
He adds that cashback sites like TopCashback are a good way to earn a small percentage back on essential spends.
Getting a student bank account can be very beneficial.
“The majority of banks have released their perks for this year, so see what they are offering in terms of 0% overdrafts and incentives like cash, vouchers or perks,” recommends Butler.