What would you do with this money?

[themoneyman]

I am 21 and currently a full time university student, just about to complete my first year, and also work part time. I live at home with my mum who doesn't charge me anything for living here as i chose to study in my home town. I have managed to save £5,000 pounds this year from my student loan and part time earnings (I am a saver!). I run a small car that i own outright, but this is my only large expense. I am beginning to think about my future. These are my options currently.

1. Think of the long term and continue saving and living at home, i would potentially have £15,000 plus at the end of my course. I would use this money towards a house/flat deposit, assuming i find employment quickly. (Sensible option!)

1. Move into privately rented accomadation now and money would be used for furniture etc. ( I am desperate for my own space!). I am not keen on house sharing, so this isn't an option. Me and my mum get along but she has a tendency to still treat me like a child and imposes rules, curfews etc

1. Fuck it and just go travelling and buy a new car and a whole host of other indulgent things!

It's almost never worth paying back student loans faster than the legal minimum so forget that idea.

Read up on moneysavingexpert as to why, short answer is house deposit or pension will be a better option for about 80-90% of people.

Option 2 followed by 3 when you get your degree - have some fun!

With the interest rates on student loans being variable and getting dearer I would not take the maintenance loan nex t year and live on your income from the part time job. It is no longer cheap money. I would put your £5k into a help to buy I SA.

I would combine 1 and 3. Put some away for savings while also having a couple of holidays etc. but don't blow it all or you really will regret it! You are very lucky to be in a position where you are able to save so much so even though I appreciate you want your own space, your mum really is helping you out massively.

With the interest rates on student loans being variable and getting dearer I would not take the maintenance loan nex t year and live on your income from the part time job. It is no longer cheap money

It is cheap money if you are like the majority and don't have to pay it all back. Interest rate is irrelevant for most too. They could whack it up to 100% a year and it would have no effect on the amount many graduates pay.

Unless the OP expects to earn £40k+ for 30 years after graduation, she should take all the student loans she is entitled to and pay them back out of her salary at the agreed rate.

Go travelling!!!! 1000000%!!!!!

As far as the money is concerned, I would stay at home, and do some modest travelling. Eg spend 20% of the money, not all of it. Maybe try some sort of working holiday so it doesn't cost as much.

Don’t pay off your student loan as it is different to other debt-it is basically a graduate tax for most now. I’d save most and go travelling. If you’d been willing to do a shared house then that can be an experience in itself but I wouldn’t choose a private rental on my own unless my parents were driving me crazy.

If you can save most and use some for travel your 30 year old self will thank you.

As someone who is debt FREE, there is nothing like it.
One thing you do not want is to take all this money go travelling and then return with a monkey that is student debt around your neck.
Say for example on your travels, you decide that you want to stay in say NZ extra time, at the back of your time is that debt that you have left at home.
I would travel with a clean slate that way I leave no dirty laundry if I so choose to say longer in whatever country I find myself.
I agree with the person who said if you could find a working holiday so that it does not cost you all your money.
Finally, I know that you are young, but the last thing you want to start off life is with debt. If you can rid yourself of it, so much the better.
I would tell anyone, happiness is being debt FREE

Stay at home . Use the money for next year and don’t get a loan . Isn’t the interest something close to 6% now ? . Keep working part time and save as much as you can . Boring but you’ll thank yourself in ten years time .

Move out, but house share. Get a furnished place and suck it up.

I think a huge part of university life is the learning to be independent / living away from home, so although Option 1 is the 'sensible' option in terms of finance, I think it a bit sad, if you can afford to, to not do anything for "the memories".
If you don't want to live like a student for your student years, then I'd encourage you to travel or gain some experience you can look back on with fondness in later years.
Even if you worked abroad in your holidays or something - you'd probably not earn a lot, but you should earn back your flights / costs so you end up 'neutral', and you'd get a bit more 'life' than living at home with parents.

For me if you’re not going to be a very high earner and your mums happy you’re not contributing at home.

Then I’d go for option 1

If you’re going to be a very high earner the. I’d go for option 4 and borrow the minimum I need.

But assuming that’s not the case max the fuck out of your student “loans”. Don’t ever pay a lump sum off and please treat as a graduate tax and not a loan. - you will only pay back 9% of anything over £25,000 per year. So if you earn £30k it’ll cos my you £450 per year regardless of how much you owe and regardless of the interest rate.

Even at £40k it’s only £1350 per year so you’d pay £40k over 30 years. So still wouldn’t pay any interest.

At £50k per year it’s be £67,000 grand so at that point assuming you borrow the Nax your kicking into interest. And that’s assuming you earn £50k for the full 30 years.

Def option 1. That money could be very useful to get you started after graduating. One thing you should really look into is a Lifetime ISA these only started in the 2017-2018 tax year. You have to be between 18 and 40 to start one. You can pay up to £4000 per tax year into them and the government tops it up by 25%. Please check government website. This is really good. Do not try to pay back a student loan instead of saving a deposit etc , you do not need to pay it back until you earn over a certain amount ( most financial advisers seem to suggest thinking of it as an additional tax- only pay when earning etc).

I lived in a house share for a short while and had an awful experience, so i am reluctant to go there again! There are lots of quite nice housing association flats available in my city for around £350 per month which i was considering as its cheaper than privately renting and i am eligible to apply as i have lived here for more than five years. I'm just worried that when i move out i will never have the money to travel again. I am hoping to be a probation officer so mid range salary i suppose.

I lived in a house share for a short while and had an awful experience, so i am reluctant to go there again! There are lots of quite nice housing association flats available in my city for around £350 per month which i was considering as its cheaper than privately renting and i am eligible to apply as i have lived here for more than five years. I'm just worried that when i move out i will never have the money to travel again. I am hoping to be a probation officer so mid range salary i suppose.