Wednesday 27 May 2009

Money saving tips for gap year students brought to you from today's Telegraph

The Universities and Colleges Admissions Service says that about 33,000 students are currently on gap years before they take up their university places in the autumn, and a similar number are expected to defer their entry this year.
Many students are now using this time off to earn money to put towards higher education costs.
With a typical three-year degree costing in the region of £42,000, according to the Children's Mutual, and many parents less able to help out with costs due to the recession, this is likely to prove a sensible option.
Younger people often earn poor rates of pay, but the good news is that this month the Government announced that the minimum wage rate for 18 to 21 year-olds will increase marginally from October, from £4.77 an hour to £4.83 an hour.
Employers will also be banned from using tips and service charges to "top up" staff pay to meet the minimum wage from October, which should help those working as waiters or bar staff.
However, if someone leaves you a tip by adding it on to their debit or credit card bill, this money can still be used to pay restaurants' other expenses and so may not be passed on.
It is worth making sure that if you are using your gap year to work, you don't end up overpaying tax.
If you work and pay tax during the year, but earn less than your personal allowance, which is £6,475 for the 2009-2010 tax year, you could be eligible for a tax refund.
You can complete a P50 to claim a tax repayment if this is the case. You will need to send it to your tax office with your P45, which you should have been given by your employer when you left your job.
The time limit for making a repayment claim is five years and 10 months from the end of the tax year. So, for example, you must make a claim for repayment of tax paid in the tax year that ended in April 2004 by January 31 2010.
For more information, HM Revenue and Customs has a website designed to make dealing with tax easier for students at The site also has a calculator to help students work out if they have overpaid tax or not.
Students who want to spend part of their gap year travelling will also have to do plenty of financial planning.
Comprehensive travel insurance is vital so that you will be protected if anything goes wrong, and gap year travellers need special cover which lasts the length of the trip. If you are planning to go away for several months, then you will need an extended travel policy rather than an annual policy.
While annual policies provide cover for a year, each trip is usually limited to a set number of days.
Comparison websites such as and can enable you to compare the cost of extended policies, but make sure you compare cover limits carefully, because cheapest is not necessarily best.
If you are planning adventurous activities while you are away, such as scuba-diving or white-water rafting, check the small print on your policy to see if you are covered. As well as insurance, anyone travelling for a long period of time needs to work out the most cost effective way to withdraw cash while they are abroad.
Most students wouldn't be eligible for a credit card, and should avoid them anyway to prevent running up debts before university, but for those wanting a debit card that doesn't charge over the odds for use abroad, Nationwide's Flex Account Visa Debit card is the best one to use.
However, remember that from June 1 a 0.84pc fee will apply to worldwide debit card transactions, excluding Europe, rising to 1pc from July, so you won't be able to completely escape foreign usage charges.
Another option is to take a prepaid card. The idea is that you load it up with money before you go and then use it to pay for things and withdraw cash whilst abroad.
FairFX is one of the best-value prepaid cards and you can load it with either US dollars or euros. There is an initial application fee of £9.95, but after that the only charge is either €1.50 or $2 each time you withdraw cash.
You can top up the card by bank transfer and you can only spend what is on it, so it can be useful for budgeting. The card can be used at any retailer with an electronic terminal that accepts MasterCard.
Whatever post-exam plans A-level students might have this summer, and as boring as it may seem, a bit of careful financial planning is always wise, especially as every penny will count when it's time to start higher education.

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