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Saving money is actually not a simple thing to do since we have to spend it on lots of things every single day, especially when you are a college student. You must build a budget plan for saving and spending money. In this article, BestLifeTips want to help you find the answer for how much should a college student have in savings.
Why college students should save money?
Saving money is a necessary thing to do. You must have savings for your future and to use in an emergency.
You need to save money for:
- Paying student loans: There’s a grace period from when you graduate college to when you have to start paying back your loans. But what if you haven’t found a job before that 3-6 months’ grace period is up? You need to have enough money in savings to cover your monthly student loan payments.
- Renting/Buying an apartment: You’ll likely need the first month’s rent, the last month’s rent, and a security deposit (that is typically equal to one month’s rent payment) in order to secure an apartment.
- Paying for your relocation expenses: It’s likely you’ll have to cover your own relocation expenses at your first job out of college. Try to negotiate for this when you’re in the hiring process, but be prepared (with savings) to cover the costs for your new opportunity.
- Buying a car: Whether or not you’ll need a car depends on where your first job out of college is going to be located. Will it be in a city where you can easily take the bus/metro? Or will transportation be up to you to provide?
- Buying a work wardrobe: Wherever you work next, you won’t be able to show up in your college clothes. You’ll need a few hundred dollars to get a work wardrobe.
- Paying for living: You have to pay for foods, clothes, gas, domestic appliances, ect.
Benefits of saving money for students
- Secure an apartment near your new job.
- Pay for temporary health insurance, since there’s a waiting period of between 30-90 days before you can get on the company’s health insurance plan.
- Buy groceries, pay for utilities, pay my cell phone bill, and fill my tank up with gas.
- Build up the savings habit early: If you establish a savings habit now when your paycheck is still small, you’ll continue to save more and more money as you get your hands on a real paycheck from a job.
- Helps you build trust and confidence in your abilities: It’s hard to establish confidence in yourself in your early 20s. You are essentially taking over your life, and you need to know that you can trust yourself in doing so. There are many ways that you can build this trust. Saving money is one of them. By having savings, you’ll trust that you can handle anything.
- Helps you cover increased expenses: Right now, you’ve receiving lots of discounts because you are a student. As soon as you graduate, no more student discounts. No more subsidized housing and no more parents to help you with your monthly bills.
- Lessen your financial stress: This is important. Cut down on your financial stress by saving money. It’s a gift to yourself to not have to worry about where next month’s rent payment is coming from, or how you’re going to get enough food for the week.
- Invest in yourself: When you have money, you can invest in your health and your ability. Such as buying healthy food, skincare products, do some courses to improve your knowledge and your skills. This is a profitable investment you should focus on.
- Helps you during unemployment: You can get unemployment insurance if you’re laid off. But it is a fraction of what you typically earn, so you need savings to pull you through.
- Helps in emergencies: Emergencies are always unexpected. There will be pressure to look for extra funds at a very short notice. This problem can be compounded if the emergency is a sudden illness or car accident. It could be a matter of life and death. Accumulated savings can go a long way in alleviating the situation. That said, such emergencies usually require a large sum of money.
How much should a college student have in savings?
How much money does a college student need per month?
Going to college is an expensive venture. The amount of spending money a college student needs may be difficult to determine. It depends on many factors, including what one considers spending money, activities, and the geographical region where the student attends college.
A sample college student’s budget (spending on clothing, entertainment, food, gas/car, insurance, cell phone, activities such as on-campus clubs, gifts, books and school supplies, electronics and travel) is about $8,500, while the more generous numbers add up to $21,050 per year. Most students will fall somewhere between the two. Since many college students work and earn an average of $195 per week or $10,000 if working part time year-round, they should not need any help with spending money. So a college student needs about $710 to $1750 per month.
How much money should a college student have in savings?
According to the BLS’s 2019 Consumer Expenditure Survey, households led by someone between the ages of 25 and 34 earn an average of $76,187 a year before taxes.
As for your emergency fund, these households spend a monthly average in the following categories:
- $1,708 on housing
- $858 on transportation
- $614 on food
- $264 on health care
- $285 on utilities
Toss in an estimated $68 per month on other household expenses and that monthly essential spending costs $3,797.
You should consider taking on a second job to generate a little extra income for your savings. Or you can consider some passive income ideas.
As you gain work experience and move onto a career track, you can raise your contributions to your emergency fund and to your retirement account as well.
Here’s what you should plan on saving by the time you reach age 30:
- Retirement savings goal: $76,187
- Emergency savings goal: $14,282 to $28,564
How to save money in college?
1. Don’t buy new textbooks: Textbooks can be expensive. See if you can borrow books from a fellow student or from the university library. If not, buy or rent used textbooks at Amazon.com.
2. Bring your student ID: Discounts are available on everything from clothing to laptop and notebook computers for those with a valid student ID. Local restaurants and chains often give money off on meals, so be sure to ask before you order.
3. Don’t be careless with credit cards: Choose one with the lowest interest rate and only charge what you can afford to pay off in full each month. This will help you avoid late fees and costly credit card debt while you establish good credit for your future.
4. Go to your local bank: Ask about checking and savings accounts designed especially for college students. These often have lower fees and no minimum balance required. To track your balance and avoid expensive overdraft charges, use online banking to check your balance regularly.
5. Limit meals out: If you bought the meal plan at school, use it. The costs of eating out can add up quickly.
6. Don’t own a car yet: Parking, gas, and insurance (not to mention unexpected car repairs) add up to a substantial amount. You can always use public transit, borrow a friend’s car, or use a Zipcar if you need to travel long distance. Uber and Lyft are also affordable ways to get around.
7. Choose house wisely: It usually costs less to live in the dorms than it does to live off campus. Stretch your housing budget even further by splitting the cost with a roommate.
8. Monitor cell phone usage: Services like My Data Manager or WhistleOut.com will analyze your cell phone bills to make sure you have the best plan in place. They’ll also alert you if you exceed your monthly data limit. Make sure you set your cell phone well, weakened Wi-Fi can force your phone to switch over to data when you’re unaware.
9. Start investing if you can: If you have any leftover money, talk to your parents or family about opening a high-yield savings account. Making your money work for you will help you save even more money while in college.
10. Stay focused on your studies: Many students don’t complete their degree within four years, and every additional semester is another enormous expense. To stay on schedule, take advantage of university resources like tutoring and academic advising.
Above are some solutions that BestLifeTips want to give you who are still a college students. Hope that these can help you answer the question how much should a college student have in savings. Please Like & Share this article if you like it.