Diligent parents often make their children save a portion of everything they earn. You may remember your parents putting 10 cents of your dollar into a savings account and allowing you to spend the rest. At the time, it was probably frustrating. However, as you grew older, you soon learned the value of savings.
Nearly two-thirds of U.S. citizens have nothing in their savings accounts. People always say that they can simply save later when they’re more financially secure. However, greater financial security rarely comes. Even if you make more money, your spending-rather-than-saving habits will continue, and you’ll be left with nothing in savings.
If you want to defy the odds and set yourself up for success in the future, you’ll take the time to save money now. Here are a few things any college student can do to pad their savings accounts.
Why pay full price when you can get a discount? More and more retailers are offering discounts for products, food, and experiences. Make a habit of searching for coupon codes before you make a purchase. Try not to buy anything unless you can apply a discount.
This will not only teach you to be frugal while shopping, but it will also encourage you to shop less. You’ll spend less time shopping and more time saving when you’re required to have a coupon to make a purchase.
Many college students have the ability to save, but they don’t think about it. Taking the thought out of the process of saving makes it much easier, and automatic transfers can be set up to do just that.
Most online banking systems offer you the ability to automatically transfer a certain dollar amount into your savings account each month. You can set that amount based on your current budget, but try to make it at least $50 per month. With that small amount being transferred into your savings monthly, you’ll have a savings of nearly $2500 after four years of college.
If you don’t keep a written, monthly budget, you should. Budgeting tells you how much money comes in each month and how you plan to spend it. It can help you identify categories of overspending so that you can live a more frugal lifestyle.
Most college students can tighten their budget in a few areas, including skipping the student meal plan, eating out less frequently, making your own coffee, biking instead of driving, shopping smarter with your groceries, nixing the credit card, canceling the gym membership, dropping your Netflix subscription, and purchasing used instead of new items.
Each dollar you save after setting and keeping a budget can be put aside for your future. To stay motivated, imagine a world after graduation where you don’t have to worry about your finances after you graduate and look for a job.
You’re pretty far from thinking about retiring while you’re in college, but consider saving for that happy occasion now. Retirement funds grow based on contributions and compound interest. The sooner you begin a fund, the larger it will grow when you retire.
To put this in perspective, consider this: A college student who contributes $25 per month starting at 20 years old will have $59,890.53 saved by the time they’re 60. Your personal contribution will be a little less than $20,000, so the rest of your earnings will be purely based on interest.
On the flipside, if you waited for ten years until you were in a stable job to start saving, your monthly contribution would have to more than double if you wanted to achieve the same result. That’s the power of compound interest in action, and you should use it to your advantage.
You can save using robotic advisors, employer-sponsored plans, apps like Acorns, or by starting an IRA. Just remember that the sooner you save, the more money you’ll have at retirement.
It may be tough to find extra money to save, but this is something you’ll never regret. It will help you get started with your life after leaving college and teach you a highly valuable life skill that you can use over and over again.
Break the mold of the traditional, broke college student and start saving now.