Welcome back to the Broke student series! In this post, I’m going to talk about how I, just a another one of the many stereotypically broke students, manage my finances! If you have different ways of dealing with your money matters, please comment and share it with me!
Before we start, just a note on the claim and the premise: Everyone at LSE is a broke student. Why? The basic economic problem (no, I’m not saying this cause I’m an Econ student myself). We have too many choices to pick from, too many things to do, too many expeditions to go on and too many events to attend. All this creates what we wannabe economists call unlimited desires. The problem comes in with limiting constraints (called “resources” in fancy academic terms) like time and money. Inevitably, we all are left with difficult choices and in this series of posts, I talk about how I deal with them!
To understand finances here, you need to start off by understanding one thing. This isn’t like how it was at home. This, of course, has different implications to different people. The most resounding of which, to me, was realising that people don’t use paper money as much over here. That’s right! Back at home, my wallet would usually have enough notes for me to survive at least a month without a Bank/ATM visit. Here, the entire culture itself is different. Everything is available -and in fact preferred- in paperless transactions. Mostly, this means your debit card becomes your usual paper notes and this has an interesting effect. For starters, the Broke Student can now more carefully monitor his or her expenditure. This is possible because every swipe is recorded and available for review (which means that you can later look at your bank statement and regret your expenses specifically and categorically). Moreover, your wallet becomes empty! That’s right!
However, the Broke Student knows better than that. Often, the cheapest restaurants, take out places and eateries transact in tangible money only! Take the example of Wright’s Bar outside the Old Building (more on this when we speak about cheap places to eat at LSE). Hence, the Broke Student always carries a few pounds in the wallet. Therefore, what you’re left with is an empty wallet with the chatter of a few coins. This is a perfect moment to stop and take in the stereotype.
Now that that’s established, here’s something for you to keep in mind when you’re new in London. London, as you know, is the financial capital of world. The number of banks here is overwhelming. When you get here as a student, you need to pick one and set up your home base. However, they all will seem the same to you (student accounts in most banks here are free, enjoy similar overdraft benefits and almost the same interest rates, etc.). So, the question comes up, how does the Broke Student pick? Easy! Pick the one which gives you the best free stuff! That’s right, banks incentivize students by giving a whole lot of free goodies! It could be a free Amazon Subscription or a free National Rail Card. You take your pick depending on how you think you’d be spending your time here! I was ambitious enough to think I would travel a lot, which is why I went with NatWest’s free Rail card. If don’t like any of these big free gifts, don’t worry, they give you the small important stuff too (I got a bottle opener, a gym bottle and some candy).
Lastly and most importantly when we talk about finances: The budget. As an international Broke Student (unsurprisingly, this isn’t a rare category) it took me a while before I could understand how my expenses are in this new environment and, hence, decide on my budget. The best advice I can give you is that you need to observe yourself. Document your expenditure, pay attention to your bank statement, categorise your expenses and talk to your friends or do some general research. According to the UK Visa Office, If you will be living in central London you will need at least £1,265 for each month with everything included. This, I thought, was a good standard. Think of 40-50% of this to be your accommodation expenses. Everything else has to fit in the remaining bit. I can tell you that the Broke Student can optimise that further to about half. However, everything comes with a compromise.
On a concluding note, let me just give you an insight on how my budget looks and leave you with some general tips. Obviously, food is my biggest expenditure. Combined with travel, it easily takes up 60% of my budget. The general tip to note here comes from my parents: do not compromise on your food. Spend leniently on that and be comfortable. Where you can optimize is everywhere else. Don’t believe me? Wait till you read the next post.