Beans means you've overspent

EVERYONE knows the student stereotype: shabbily-dressed and forever eating baked beans because they are skint.

But you would be surprised how much money is at your disposal when you first reach university.

Lump-sum student loan payments and plenty of credit provide the opportunity to spend big, and many freshers find the temptation to blow a fortune irresistible. Hannah Essex, vice-president of the National Union of Students (NUS), says careful budgeting is required to avoid eating baked beans by Christmas.

"Many freshers are living away from home for the first time and it can be hard. You need to ensure you are prepared," she says.

First, open a bank account. "All high-street banks offer student accounts and incentives to open them. Shop around for the best deal," says Essex.

HSBC and NatWest currently promise five-year Young Person's Railcards worth Pounds 100, while Barclays provides Pounds 20 HMV or Waterstone's vouchers. Others, such as RBS, offer discounted mobile- phone deals or books. Student accounts automatically have interest- free overdrafts, initially around Pounds 250.

This generally goes up to Pounds 1,000 by the end of the first year, and rises each subsequent year.

Credit cards are usually available, and start with a limit of around Pounds 500.

These can make life easier, and also give benefits such as purchaseprotection insurance and extended warranties. If you are transferring a balance from another credit card, many banks give you six months interest-free to pay it back, which can save a lot of cash.

Currently, the Student Barclaycard is one of the best deals: a Pounds 600 limit, no annual fee, 56 days' interest-free credit on purchases and Pounds 20 cash when you first use your card.

However. the standard interest rate after that is a high 17.9 per cent APR.

Spending on credit cards is easy but repaying the debts at high interest rates can be crippling in the long term. Many students find themselves saddled with huge payments years later.

Start preparing for expenses such as rent and utility bills. Sharon Bange, of Government-backed education adviser Aimhigher, says: "Most freshers live in halls, but some live off campus. Private accommodation is usually more expensive because you pay bills, whereas in halls it is usually allinclusive." As a guide, standard singles in halls at the University of East Anglia, Norwich, are around Pounds 50 a week, while rooms at King's College London cost Pounds 77.

Bange says many freshers don't think of all the extra bills that can arise.

"Students are exempt from council tax if they live in halls or share a student-only house, but things like TV licences, insurance, textbooks and photocopying are easily forgotten. If you are living off-campus, transport costs can be quite large."

Students are easy targets for criminals, so get insurance for your possessions. Sometimes you are covered under parents' home insurance but, if not, the NUS recommends Endsleigh Insurance.

It offers cover from Pounds 18 a year - depending on how much your possessions are worth and where you live.

Shopping around for the cheapest suppliers of gas and electricity can also save you money. Independent online service www.uswitch.com claims people can save an average of Pounds 140 a year on household bills by choosing carefully, and if you buy several services from one company, they often charge less.

Take advantage of the numerous student discounts that are available.

The NUS offers a discount card on Orange mobile phone deals - including 2,000 free text messages and cut-price pay-asyougo handsets - which are ideal for students trying to limit their bills.

There are also reductions on goods such as clothes, food, computer software and holidays. A database of all discounts can be accessed at www.nusonline.co.uk.

Eyecare, prescriptions and dental treatment are available free to students under 19 years old.

However, those aged 19 or over need to apply to the health service (using an HC1 form) for means-tested help with healthcare, such as vouchers towards the cost of glasses and contact lenses and money off travel to NHS hospitals.

A part-time job is an excellent way to fund your time at university.

Students are allowed to earn up to Pounds 4,745 a year tax-free, but if you want to receive your wages without any deductions immediately, you will need to fill out a P38 exemption form, which is available from the Inland Revenue website: www.inlandrevenue.gov.uk, or Post Office branches. Otherwise you can claim back tax paid using a P50 form. Anyone earning less than Pounds 91 a week - Pounds 4,732 a year - will not pay national insurance, but contributions of 11 per cent will be due on money over this level.

If, having budgeted, you still can't make ends meet, don't panic.

Aimhigher's Sharon Bange says: "Universities have hardship funds for those in desperate need, and that money doesn't usually have to be repaid. Contact your university's advice centre for details."

Getting by on a budget is not easy - but discipline and hunting around for savings will be rewarded. You'll thank yourself later when the repayments begin.

. NUS: www.nusonline.co.uk . Inland Revenue: www.inlandrevenue.gov.uk .

Aimhigher: www.aimhigher.ac.uk . Consumer Credit Counselling Service: 0800 138 11 11/www.cccs.co.uk . www.support4learning.org.uk for comparison guides on bank accounts . www.studentmoneynet.co.uk for information on loans and Isas . www.studentfreestuff.com for freebies and offers

(c)2004. Associated Newspapers Ltd.. Provided by ProQuest Information and Learning Company. All rights Reserved.