- Saving money in college can be a great way to jump-start your funds for after graduation or save for goals like buying a car or paying off student loans.
- Find work that fits your school schedule, and take advantage of extra summer earnings to boost your savings.
- To save most effectively, pick an account that will help grow your savings, make specific goals, and try to use your resources, like your meal plan, as much as possible to cut costs.
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While it’s costly overall, it’s going to be one of the few times in your life when your day-to-day expenses are very low and you’ll be able to pocket a lot of the money you make. It’s a great time to start putting money away.
If you know how to save money in college, you could graduate with a few dollars in your pocket. Here’s a step-by-step guide to building your savings in college.
How to save money in college
1. Set savings goals
Whether you’re saving for the down payment on a car, the first payment on your student loans, the deposit on an apartment, or you just want to have cash on hand for something else as you start your post-grad life, it’s helpful to have a goal in mind that you’re saving for.
Then, set specific, smaller goals to get there. Setting a savings goal for each month or semester will make your savings goal feel attainable.
Write down your end goal and your monthly savings goal, and put them somewhere you can see them. You’ll be far more motivated to save if you keep a goal in mind.
2. Open the right account to maximise your savings
There are plenty of college checking and savings accounts out there. But that doesn’t mean you’re limited to just those accounts. After all, they don’t offer much of a return in interest – the FDIC says that the average savings account interest rate is 0.09%.
What if you could get 26 times that amount of interest on your savings? You don’t need to be a maths major to know that’s a better deal. A high-yield savings account will get you this type of interest.
A high-yield savings account is just like a traditional savings account. As long as you’re over 18, accounts with online banks like Betterment and Wealthfront are available to you. Both have very accessible minimum deposits – Betterment’s minimum deposit is $US10 and Wealthfront’s is $US1.
3. To save money, you’ll have to make money
There are plenty of ways to make money in college these days. If you’re good at something, why not sell it? Sell your knowledge by tutoring other students, or sell your writing, art, or design skills online as a freelancer.
Taking up flexible work can also allow you to have another job, like being a resident assistant or working at a library or in a coffee shop.
Working in college will also be helpful post-graduation. Not only will you already have work on your resume, but a study from Rutgers University shows that students who worked in college are more likely to make higher incomes later in life than those who didn’t work for pay.
4. Summer is the perfect time to save
Summer is the season for earning when you’re in college, and it’s also the perfect time to stash that money away. Find a job that pays well, and build a relationship at the company so that you can keep coming back year after year.
By working during the summer, it’s easy to edge your way towards your savings goals with extra income. Put those earnings into your high-yield savings account, and that extra summer savings will grow all year long.
5. Leverage the resources that are already paid for
For most Americans, food and housing are their largest monthly expenses. But college is a unique time since, for many students, those expenses are already paid for.
Instead of spending money on a gym membership, use the school’s facilities. And, kick the takeout temptation and use your meal plan instead. The money you’d usually spend on food and housing can be put into your savings account, building the padding you’ll have when you graduate.
6. Treat saving as a reward
Sometimes, the best thing you can do is to change the way you think about saving. In college, you probably have a thousand other things you’d rather be spending money on rather than saving it.
If you treat saving like something you have to do, it will feel like a chore. But if you see saving as something you get to do, you might just find that saving becomes a whole lot easier.
7. Don’t wait until you have a large sum to deposit
Many people feel they have to wait until they have a large amount to actually deposit it into their savings account. But there’s no reason to do that.
Let’s face it: You probably won’t be saving tens of thousands of dollars in college. But even the smallest amounts add up. Just by putting away $US100 or $US200 each semester, you could leave college with a savings account of $US800 to $US1,600. And that’s something you’ll be very glad to have when you need it.
8. Automate your savings
You’ll have a lot on your mind in college, and the easiest way to make sure you don’t forget to save is quite simply to automate it.
You can schedule savings deposits each month so that you don’t even need to think about it. Then, you’re free to keep your mind on your studies and let the saving essentially handle itself.
9. Get out of college quickly, and don’t go over four years in school
The Federal Reserve Bank of New York looked at data for those who spent five and six years in college and found that they’re likely to earn $US2,500 less per year at age 25 than their four-year peers.
Where a student who finished school in four years will likely see a 14% rate of return, a student who finishes in five years will see just 11%, and six years will see 8%.
Not only will you save a whole year of room and board costs in college, but you’ll also have the chance to start your career earlier than you would if you stayed in school for five years, making your dreams of a bigger paycheck come sooner.
10. Find ways to save whenever you can
There are opportunities to save around every corner in college. From showing your student ID for discounts at movie theatres, stores, coffee shops, and more, to having several roommates to split rent and bills with, college is a time to save.
It’s only four years – why not get the full college experience and live frugally? If you can find ways to save on everyday expenses, you can find a way to put even more aside for the future.
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