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Student life is often tough on the wallet – but the first steps onto the career ladder following graduation are another financial pinch point.
New research shows that many young adults are finding themselves weighed down by a significant financial hangover long after they have finished their studies.
More than a third (35%) of graduates feel their student debt has impacted their financial wellbeing and delayed major life milestones, such as getting married or starting a family, according to credit insights provider Intuit Credit Karma.
Nearly half (46%) of young adults feel they are only just managing to make ends meet on their salaries.
Many banks offer fee-free student overdraft buffers, which can be helpful to keep costs down while studying. Nearly half (49%) of graduates surveyed used their student overdraft allowance while at university.
But on average, graduates are taking three years to pay off their student overdrafts, according to the survey of 1,000 UK adults aged 21 to 30, carried out in September.
Nearly three in 10 (29%) still feel reliant on their overdraft even after finishing their studies.
The survey also revealed that 18% of people are unsure what their credit score is, which could show a gap in awareness – as a good credit score can help to widen access to financial products.
A fifth (21%) of graduates say they have more than £5,000 of personal debt, with many struggling to make significant progress in paying it off.
Balancing a budget on a graduate salary can be tough, so Akansha Nath, general manager (international) at Intuit Credit Karma, suggests creating one that’s “realistic”.
She suggests: “Keep your budget simple and organise your expenses into a few key ‘buckets’ including income, necessities and savings or debt repayments.
“From there, you can determine how much money you have left to spend on wants, or non-essentials, for the month.”
She also highlights the 50/30/20 method used by some people to budget, which involves putting half (50%) of an income towards needs, 30% for outgoings that are nice-to-have but not essential, and 20% for savings or paying down debt.
Everyone’s financial situation is different, so Nath adds: “See how this works for you and if it doesn’t fit, then make adjustments.”
Nath says it’s important to make sure your needs are covered as a priority, over “wants” such as nights out or non-essential shopping.
She also suggests using credit wisely, adding: “Credit cards can be useful for building credit, but only if used responsibly.
“Avoid carrying a balance, and ensure that you only borrow what you can afford to pay back. Try to make at least the minimum payment each month so as not to damage your credit score, but always aim to make your payments in full.”
