Rules for Saving Money in Your First Year of College
In your first year of college, you might be juggling numerous things. From attending classes and keeping up with coursework to working a part-time job to making new friends, there's a lot to manage, and keeping tabs on your finances may not be high on the list.
The financial habits you develop in your first year of college can benefit you long after graduation day arrives. Getting into the savings routine early on is especially important if you want to start off your career with a solid emergency fund in place, or eventually buy a home.
Saving money in college is all about having a plan and making the right choices. If you want to start building your cash cushion, remember to follow these rules for saving money as a college freshman.
Create a Budget
Making a budget for the first time isn't as daunting as it might seem. A budget is simply a plan for spending. To make a budget, add up everything you anticipate spending for the month, then compare that to the money you have coming in. That includes any money you earn from working or financial support your parents might provide. The goal is to make sure that you're not spending more than you have coming in. If you are, you'll need to cut back on some of your expenses so you can find money to save.
Choose the Right Bank
The first year of college is a great time to open a checking account and a savings account if you haven't already. Your checking account is for paying bills or making purchases; your savings account is for holding the money that you don't plan to spend right now. When choosing a bank, focus on two things: the fees they charge and the interest you can earn on savings. Student accounts tend to carry fewer fees, but at the same time, it pays to make sure you're earning the highest rate possible on your savings so your money grows faster.
Take Advantage of Student Discounts
Your student ID could be the key to savings on things like sporting events, food, and entertainment. Businesses in college towns offer discounts to students as an incentive to attract the college crowd. The next time you head to a restaurant, movie theater, or another local business, be sure to show your student ID and ask for a discount. Take the money you would have spent without the discount and stash it away in your savings account.
Cut Costs on Textbooks
Textbooks can easily eat up a big chunk of your spending budget in your first year of college and beyond, but it's possible to get the books you need for less. Sites like Amazon.com and Chegg.com offer used textbooks for sale at a discounted price, and, if you'd prefer not to buy, you could also consider renting your books. Another way to save on books as a freshman? Join forces with another student who's taking the same class and share textbooks, cutting the cost in half.
Be Smart About Student Loans
Student loans can help cover college costs if you don't have a 529 plan or scholarships to fall back on, but they can also lead you deep into debt. If you're borrowing federal loans, the number one rule is to only borrow what you need. This saves you money on interest later, since you're paying down a smaller balance. The same rule applies to private loans, but the other consideration to keep in mind is getting a cosigner for those loans. Private student loan rates are based on your credit score, so if you haven't established a solid credit history yet, asking a parent to cosign could help you lock in a lower rate and more savings.
Go Simple on Food Costs
Your campus meal plan can add several thousand dollars to your total cost of attendance each year. One way to avoid that expense and save money is by preparing simple meals, either in your dorm if you're living on campus, or your apartment if you're living off-campus. Steer clear of pricey convenience foods whenever possible and plan your meals and snacks each week before you shop. To keep costs down at the grocery store and save your budget, consider shopping at a low-cost chain like Aldi's, buying store brands versus name brands, clipping coupons, and using a coupon app for the things you purchase.
Take Advantage of Campus Freebies
One of the best things about college is that there's always something to do on campus when you're not attending classes. That could include movie screenings, theater productions, club meetings, or art exhibits and, quite often, these events are free for students. If you're trying to keep entertainment from eating a hole in your budget so you can save money, check out as many of these freebies as possible. As an added bonus, they're a great way to meet new people if you're feeling like a stranger in your first year of college.
Automate Your Savings
If you've set up a savings account, you have to make an effort to ensure that the money you want to save makes its way into it. The easiest way to do that as a busy college freshman is by automating your savings deposits. Go over your budget and decide how much you can commit to saving each month. Then, set up an automatic transfer in that amount monthly, or break it down weekly or biweekly, depending on how often you're adding money to your checking out. Even small amounts can add up to a sizable savings cushion by senior year.
Saving money in your first year of college can help secure long-term financial success. As you start saving, remember to set clear goals to help you stay motivated along the way.