University student saves £1.8k a year with smart money saving ‘pay-packet’ hack - how does she do it?

A University student has shared some smart money saving tips to prevent overspending - including paying herself ‘pay packets’ from her student loan. Emma Cutler, 21, adopted the measures to ease the burden of university costs and is already saving £1.8k a year.

The Loughborough University student - who is studying Media and Communications - gets three £3,000 student loan payments a year and separates the money into pay packets when it drops into her bank account. Cutler has a packet for bills and rent and splits the rest between food shopping, nights out, self-care, and miscellaneous spending money.

She uses online saving pots and cash to stop herself from overspending and even batch cooks all her meals. Emma, who does content creation for the university’s social pages, originally from Birmingham, said: “I’m probably saving a good £150 a month.

“My rent and bills are £550pcm and then I put aside £120 for food shopping, £30-50 for going out, £30 in my miscellaneous spending money pot and £50-£80 in self care.

“It stops unnecessary spending and it makes you think twice before you buy something.”

Emma said she was more focused on affording rent in her first year at Loughborough University but is now in a position to save for the ‘future and longer term plans’. “I’ve developed my own way of budgeting and knowing how to save for things coming,” she said.

Student loans are split into three instalments, which are typically timed for the start of each term. However, students must learn how to budget each month or they risk overspending.

“It can be difficult as you get it in three instalments so I work out what the average will be for each month,” said Emma. “At that age, a student loan is a big sum of money for the first time.”

After working out how much she can spend a month, Emma splits up her money, allowing her to carry it over to the next month if she doesn’t spend it. Emma is then able to plan for future events such as buying presents for Christmas.

“It takes away the pressure and guilt of spending a lot of money if I know I’ve saved for it - it’s more controlled spending.

“I used to use cash more often but now I use Monzo and put everything into pots and it rolls over to the next month so you can make up for quieter months.”

When it comes to a night out, Emma choses not to buy many drinks, instead she opts to drink at home beforehand.

She said: “That’s something we always did in first and second year - you don’t have to buy many drinks at the club if you pre more at home. I also take my own coffees into lectures instead of the £4 from Starbucks to save money.

“And prepping lunches is good if you know you’re going to be there for the day so you don’t need to use the canteen.”

Emma’s ‘pay-packet’ saving plan broken down

Rent - £400 a month; Bills - £150 (inc subscriptions); Food shop - £120 a month; Going out - £30-50 a month; Spending (misc) - £30; Self-care £50-£80