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student insights

How to master your personal finances

Author: ICAEW Insights

Published: 30 Mar 2023

young woman laptop paperwork check shirt personal finance ICAEW students

You may be a whizz with client accounts, but how are you when it comes to managing your own money? Paul Day of caba shares his advice on ensuring good financial health now and in the future

Recognise that you’re not an expert

As an ICAEW student, you’ll be no stranger to a spreadsheet – but that doesn’t necessarily make you an expert when it comes to managing your own finances. “There’s an expectation that because it’s to do with the management of money it must all be the same thing,” says Paul Day, senior support officer and specialist debt advisor at caba. “But it’s like going to your GP and asking for a filling.”

Get into good habits

Juggling the work/life/study balance means this is already a busy and stressful time of life, but the sooner you can get into good personal finance habits, the better. “When you’re managing studies, a pressured job and a household – potentially living on your own for the first time – while still trying to maintain a social life and time for yourself, it’s easy to see how something like personal budgeting can fall down the list of priorities,” says Paul. 

“This is also the time in your career when you have the least earning power, so you need to learn pretty quickly. Getting into good habits now, and that pattern of money management, will stick with you for the rest of your life.” It’s especially important when you have longer-term financial goals, such as home ownership. “If you have those aspirations, why not come up with a plan to achieve them?”

Manage it your way

There’s no right or wrong way to keep track of your finances – it’s about finding one that works for you. “There are two main tools to choose from: spreadsheet or app,” explains Paul. “If you’re of that spreadsheet mindset, which many students are, I find people tend to prefer creating their own rather than using a standard template.” 

The other approach, which is becoming increasingly common, is to use an app. “There are several apps that hook into your bank account to help you track and monitor your expenditure, and they offer a really good analysis of what you’re spending,” says Paul. 

Look back… and forward

Whichever tool you use, the most important thing is to be accurate. “I see a lot of people’s first draft budget and it will say: ‘£200 on food.’ Nobody is spending exactly £200 a month on food,” Paul says. “So what I always suggest people do is to look back through three months of bank statements, add up every single line of food spending, and then average that out for a monthly amount.” 

It’s important to look at what’s not in there, too: “If you looked at your January, February and March bank statements now, for example, you wouldn’t see any Christmas expenditure in there – but you know Christmas is coming. Or it might be that a friend has just got engaged and you’ve got a wedding to attend. Always look forward to those one-off costs you know are coming.”

Be realistic

When it comes to setting a personal budget, be realistic. “Often when clients come to me, they impose some very strict restrictions on themselves, where they say, ‘Right, that’s it, I’m doing my budget. No more nights out, no more concerts, no more takeaways,’” Paul says. “You have to be realistic. If you were to set a budget like that, effectively not living your life, then that budget is going to fail. When you’re working, especially in this kind of pressured environment, you need forms of stress release. So set an amount each month that you’re going to dedicate to fun.” 

Beyond your everyday household and living expenditure, you should also budget for bringing down any existing debt, as well as setting something aside for a rainy day. “Becoming debt-free is a really good, solid first goal. Alongside that, if possible, start saving a little as an emergency fund.” 

Be aware of external factors

Something that’s not in our control, of course, is what’s happening in the wider economic climate. “We are in unprecedented times,” Paul says. “Some really significant global events have happened over the past few years, and these external factors are combining in such a way as to cause real economic pressure. Nobody is immune from them.” 

Research shows that two of the groups disproportionately affected by the cost-of-living crisis are single people living on their own, and those under 30 – groups that many ACA students will be part of. Many are also at the mercy of a difficult rental market where demand is far outstripping supply. “I’ve been at caba for 10 years, and in the last year the number of people in financial difficulty has really started to ramp up – and there are a lot of students among them.”

Remember you’re not alone

The reasons why students find themselves in financial difficulty are many and varied. There are a few common themes, says Paul – the rising cost of living, a relationship breakdown or a health situation – but rarely is it anything to do with financial poor practice. “Being in debt is such an awful feeling in and of itself, without that added guilt or sense of failure. When people pick up the phone to me, so often the first thing out of their mouth is, ‘You must think I’m so stupid. I bet you’ve never seen anyone as bad as me.’ I’ve done this job for over 10 years, and it wouldn’t exist if there weren’t people in this position. You shouldn’t feel any guilt or shame.” 

As an accountant, there’s the added pressure of societal expectations, that you should be ‘good’ with money. “I’ve known so many talented accountants with personal finance problems who are still excellent professionals, highly rated by their clients,” Paul says. “An essential part of doing my job is breaking down that stigma, and saying, ‘You know what? It’s OK to ask for help.’”

Ask for help when you need it

All ICAEW Chartered Accountants and ACA students have lifelong access to support from caba – and in the case of financial difficulty, that support can be both emotional and practical. “Half the job is listening,” explains Paul. “In terms of practicalities, I help people come up with a budget, and look at ways of maximising their income and reducing their expenditure. Then we look at debts, and weigh up the pros and cons of the various options for tackling them. Another thing I do is negotiate with creditors on people’s behalf, so that’s one less thing for them to worry about.” 

Lots of people, he adds, feel like they don’t want to bother the charity – when, in fact, that’s exactly what they’re there for. “Reach out as soon as you can,” he says. “So many people, after that initial conversation – even before we’ve really done anything – will say they feel so much better having just spoken to us. They’ve taken that all-important first step.” 

Visit the caba website for more advice and resources on financial health.

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