Cash-strapped students-to-be opt to stay at home

More than one in four (27 per cent) young people starting university this year will have to live with their parents to save money, according to a report from Lloyds TSB Student banking. The figure represents a four per cent dip from 2007's high of 31 per cent, and a five per cent increase when compared to numbers for 2006.

A third of the 130,000 young people who will find themselves staying with their parents while they study say that they will not be able to afford to go to university unless they live at home, while eight out of ten (82 per cent) agree that living at home is a great way to save money. One in four (25 per cent) say that living at home is an effective tool for managing their debt.

However, two thirds (62 per cent) of those who are planning to stay at home admit that if money wasn't an issue, they would prefer to fly the nest sooner.

Young people put their finances high on the list of university concerns. A quarter (26 per cent) are worried about managing money while they are at university, while one in ten (13 per cent) admit that this is the first time that they will be setting a budget and holding the purse strings. Twenty three per cent confess that they haven't received any guidance to help them with their financial planning.

Economic uncertainty and the prospect of increasing university fees are taking their toll, with 65 per cent of students saying it will be difficult to afford university if the cost of living continues to rise and 38 per cent saying that soon the cost of attending university will outweigh the benefits of going at all.

For the 66 per cent of students-to-be who are planning to live away from home, 62 per cent think that the financial implications are worth it for gaining their independence, while a quarter (25 per cent) have no choice as they want to study at a far-away institution. Just five per cent will be expecting their parents to foot the bill for their studies and one in ten (11 per cent) believe that they will be able to set a budget and make their finances work.

The main reasons for choosing to live away from home are to be closer to their university (74 per cent), to gain independence (66 per cent) and for the social life (56 per cent). One in five (22 per cent) admit that they are itching to fly the nest.

Catherine McGrath, director of current accounts, Lloyds TSB, comments: "Going to university isn't just about getting good grades, it also has to make financial sense. For many, living at home or taking on a job is a sensible option to help cut down the cost of their studies.

"However, university is also a great time to spread your wings and get a little life experience. By making the time now for some financial planning and careful budgeting, cash-strapped students should be able to enjoy further education without worrying unduly about making ends meet."

The survey also revealed that many young people are making difficult choices in order to balance the books at university. A third (34 per cent) admitted that they will be taking more than one job over the summer break to build up their capital, while a quarter will have to hold down a job during term time to get by. Fifteen per cent will rely on work during the holidays to help boost their bank balance.

However, eight per cent said that they would prefer to rely on loans and an overdraft while they focus on their studies.

When it comes to taking advantage of the financial packages on offer, 63 per cent of students said that they had applied for the Government's financial package for students, with just six per cent saying that they won't be applying for any financial support.

Alvin Hall, independent financial expert said: "Students have a lot to think about during their university career - from their studies, to managing their money for the first time and, of course, socialising. Bearing that in mind, it's hardly surprising that many consider staying at home to keep a lid on the cost of studying and give themselves one less thing to think about.

"But living with your parents isn't the only way to save money and for students who fancy striking out on their own, a little early money management could make the difference between significant financial problems and a first-class studying experience."

Alvin's top tips for managing a student budget

1. Learn how to budget. University may be the first time that you will ever have to manage your own money, but don't be afraid. Be proactive and get on top of your finances in advance. This might mean taking some time to go through your incomings and outgoings with a parent or guardian, or keeping a weekly spending diary to see where you could cut back. Either way, it will make sure that you're realistic about your finances right from the start.

2. Socialising without peril. University is the perfect time to make friends and experience new things, but that doesn't mean that you should throw caution to the wind and blow the budget in Fresher's Week. When you're having a great time hanging out with your mates, always try to be prudent and don't feel embarrassed to say that you can only spend so much - most of your friends will probably feel the same way.

3. Give yourself pocket money. Just as your parents gave you a weekly or monthly allowance, this strategy will help you begin to think about and control your spending. On the same day each week, withdraw a fixed amount of money to cover your weekly expenses. Each weekly withdrawal must be for the same amount. This way you "regularise" your outgoings. If you start running low on funds you will, by necessity, begin to alter your spending. For this to work, you must resist all desire to go to the ATM early, borrow money from friends, or call your parents or other relatives for money.

4. Only carry in your wallet the amount of cash you are allowed to spend each day. If you're a sucker for an afternoon latte or tend to get cash-happy on a night out at the pub, ration your cash on a daily basis. Not only will this stop you getting that final round in and blowing tomorrow's money, it will also allow you to save in advance for a special occasion.

5. Prepare your own meals. That prawn and avocado salad from the local brasserie might have tasted good at the time, but a homemade cheese and pickle sandwich could be just as tasty at only a fraction of the cost. Making your own lunch is a proven way to keep your daily expenditures in check. Not only can you take advantage of special offers at the supermarket saving even more money and but you can also eat more healthily.

6. Be a shrewd shopper. Take note of fashionistas and don't look down your nose at a second-hand steal. Whether it's books or an outfit, buy any items you need at second-hand stores or during the sales. This will help you to stretch every penny and pound you have and will serve you well in life after university.

7. Take advantage of all benefits that come with the accounts that that many banks and building societies offer to university students. Importantly, do not abuse the overdraft facility that typically comes with these accounts. It is not free money; it is, in reality, a loan.

For more information, visit lloydtsb.co.uk