The Importance Of Saving Money As A College Student: If you’re in college, it’s more important than ever to develop good money habits. Not only will this help you in the long run, but it will also make life easier as a student. For example, staying on top of your school work and dealing with demanding professors can be stressful without adequate time management skills and an organized approach to studying.
Why You Should Start Now
You might be thinking that you’re just starting out in life, and there is no point in saving money at such an early age. However, it’s never too early to start building good habits.
According to Elizabeth Renter at Living on The Cheap, saving money on your college expenses can take some time, but if you get into good habits from day one, you’ll find that things fall into place much easier once you start classes.
Instead of going out for lunch with friends every day and wasting money on fast food every night when you get home from work or school, pack something quick and easy like a sandwich or salad and fruits.
And even though you’re living away from home, continue to save money by doing your laundry instead of taking advantage of the free laundry services offered by your dorm or apartment complex.
These small changes will add up over time, helping you reach financial independence much faster than those who don’t practice these frugal habits now.
How Much Should You Start With?
If you’re a recent high school graduate, having $500 in an emergency fund is good practice. But after you’ve worked for a year or two and gotten your feet wet, you should aim to have at least 3-6 months’ worth of expenses saved.
Put another way: Save up so that if you lose your job tomorrow, even if it’s in December and Christmas is around the corner, you’ll still be able to make it through without having to take out an expensive loan or move back home with Mom and Dad.
Investing early on can help establish good habits that’ll stick with you for life—no matter what career path you end up taking.
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And while saving money might not be easy, now, remember that there are ways to do it without completely sacrificing fun things like eating out or going on vacation. If you start small and stay consistent, over time, you’ll find yourself with more cash than ever before.
Here are some simple tips to get started. What types of accounts should I open?: You may want to open different savings accounts based on how long you plan to keep your money invested.
The longer you’re planning to save, generally speaking, the higher rate of return you’ll want. Short-term savings include CDs (certificates of deposit) and traditional savings accounts that allow check writing but offer lower interest rates.
Medium-term options include standard brokerage accounts where investments are made via stocks, bonds, and mutual funds; these offer slightly higher interest rates but require more frequent account management than CDs or savings accounts.
How To Save Without Skipping Meals
Having fun at college doesn’t have to mean spending lots of money. You might have roommates or friends who like going out and having fun on campus, but that doesn’t mean you need to join them in overspending.
It can be easy to get along without spending much at all; here are some ideas for how to save when you go out, Split an appetizer: If you see something on a menu that sounds delicious, don’t order an entire portion just because you want to try it.
Ask your server if they offer smaller portions so you can split one with your dining partner(s). This will cut down significantly on your bill while still giving you plenty of food to enjoy. If they don’t offer smaller portions, ask if they can prepare something similar from scratch instead of using frozen or pre-made ingredients.
Most restaurants will be happy to accommodate such requests—and may even give you extra food for free! It never hurts to ask!
What If I’m Already In Debt?
It can be tempting to rack up credit card debt in college, but if you’re already taking on loans to pay for school, that might not be your best option.
If you can’t resist going into debt, at least go in with your eyes open and make sure it’s done responsibly.
To start with, Begin by asking yourself these few questions:
(1) What does my debt look like? Take a step back and figure out what exactly you owe across all your accounts. That way, you have a clear picture of where you stand.
(2) How much money am I earning each month? Calculate how much money is coming in each month—including income from any jobs or side gigs—and subtract how much goes toward bills and other expenses.
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This will give you an idea of how much room there is leftover for saving. And finally,
(3) What are my goals? Figure out where your money should go based on whatever financial goals you have set—whether that’s paying off student loans or saving up for retirement—and then decide whether or not the debt is helping or hurting those efforts.
What Are My Options If I Have No Cash Flow?
For some people, saving money is almost impossible. An August 2015 study from the personal finance site Bankrate found that nearly half of Americans don’t have enough savings to cover an unexpected $500 bill.
However, it’s possible to get your savings back on track without even taking out more money from your paycheck—you just need to be proactive about it.
Many financial experts say paying yourself first—taking money directly out of your paychecks and depositing it into savings before you spend anything else—is one of the most effective ways to ensure you’re saving at least a little something every month.
You can also set up automatic transfers so that money goes straight from your checking account to savings when you get paid. (You can do both of these things with apps like Digit or Qapital.) If all else fails, consider getting a side gig: You might not earn much at first, but those small amounts add up over time. And hey, once you start earning extra cash, why not treat yourself?
Once I Get Out Of School, Will It Be Worth It?
In college, it’s easy to live for today—but that means you might be living with financial regret tomorrow.
That’s why it’s important to start saving money while you’re still in school. Even if you only have $5 a week, put that money into an emergency fund; there will be times when life comes at you fast and it helps to have enough cash on hand to pay off those surprise bills or travel expenses.
The earlier you start saving your money, the easier it will be. It doesn’t take much effort or sacrifice—just five dollars out of each paycheck is all it takes. You’ll thank yourself when life gets crazy in a few years because you were smart enough to save your hard-earned money.
Also READ: Debt Relief: How It Works, Benefits, Types, And Disadvantage
And once you’ve built up a nice cushion, you can use it to pursue your goals (like starting a business) instead of worrying about how to pay next month’s rent.
If I don’t start now, I never will: If you want to buy something fun later on down the road (maybe after graduation), like a fancy car or round-the-world trip, then it makes sense not to save now. But if you want what most people want—to stay healthy and safe until retirement age—then don’t wait too long before starting to sock away some cash.
Don’t let what happens after graduation determine whether or not your savings plan works; instead, base things around what happens before graduation and adjust accordingly along the way.
Other Ways To Save Money During Your Four Years
Before spending money on things you don’t need, consider how you can live with less and save more. For example, instead of buying new furniture for your dorm room, think about selling some old things you don’t use.
With websites like Craigslist and eBay, people are looking to buy things around every corner.
As a bonus, using less energy will help your school earn big bucks in green-energy credits that it can sell to local utilities. The same goes for carpooling or taking public transportation—it not only saves you money but also helps reduce carbon emissions. Another easy way to save is by cutting back on eating out.
Instead of eating at restaurants, try cooking at home—you’ll be surprised by how much cheaper it is! And while shopping online might seem convenient, remember that most stores offer free shipping when you spend over $50 (which means you could get free shipping even if you just bought one thing).
If saving is important to you, start small by making sure all your lights are off when they aren’t needed or unplugging appliances when they’re not being used. You’ll be surprised at how quickly those little savings add up!
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