Saving money is one of the most useful skills to acquire in the first year of college. Well, it’s certainly a hard lesson to learn. But, once you get the hang of it, it can make your life way better. You may never know when the money you save will come in handy. You may need the money to fund your future education or to cover your family’s medical bills. And this skill is something you will always need to lead a sorted and financially independent life from an early age. So, let’s check out the five main tips for college students to save money for a bright future.
Stop unnecessary spending
Taking strolls through shopping malls or ordering pizzas every day can be tempting. But, you need to resist to be able to save money in college. You may think you are just visiting the mall and you aren’t going to buy anything. But, chances are you may end up buying a lot of things that you can live without, and that isn’t necessary.
How to trim unnecessary spending?
- Put half of your salary from your part-time job into savings. You can do the same if you receive an annual raise at your work.
- Make meals at home because ordering foods online is unnecessary spending. You can start with cooking at least twice a week and eventually make it a daily habit.
- Do not buy things on an impulse. So, you can set a shopping limit before going to malls or grocery shopping.
It is easier said than done. Prevent yourself from spending unnecessarily is by planning what you would do with the money saved. You can work towards the tips mentioned above if you have a mission in your mind.
- Make a budget
Create a budget as the new year of college begins. From your grocery shopping to personal expenditure, make a budget for everything that you might do. Create a spreadsheet. Write down all the essential and non-essential expenses in it. Then compare the income and expenses for the next year. See if you are ae in the green zone or red zone. The green zone is where your income is higher than expenses, whereas the red zone is where expenses are greater than income.
Here’s why budgeting is important:
- Helps you stay focused on your goal- You must be saving money to achieve a long-term goal. So, budgeting will help you stay focused and not let you drift aimlessly through life.
- Leads to a better financially independent life- You can have a financially independent life if you can learn to spend your money responsibly. And budgeting can help you with it.
- Prepares you for emergencies- With accurate budgeting, chances are you will never be strapped for cash. It prepares you for emergencies.
You can get help from expert paper help if you can’t prepare the budget on your own. Budgeting helps you understand your spending habits. You can figure out the things that you spend money on unnecessarily. Controlling those habits can make budgeting 10X easier for you.
- Keep track of your daily spending
From pencils to shampoos, write down everything that you purchase along with the date of purchase. Though the task is time-consuming and is often skipped by people, it can help you spend money on necessary things only. You will notice patterns that will make you aware of where your money is going. You can also identify if you need to make any changes in your spending habits.
Apps to track your spending:
- Mint– Shows income, savings goals, expenses, investments, credit score, net worth.
- Good Budget- Lets users plan their daily spending using an ‘envelope method.’
- You Need A Budget– Users can allocate every dollar they earn to specific products or tasks.
- QuickBooks Online– This lets you track expenses as they happen and maintain a strong cash flow.
Download any one app on your device and start tracking all your expenses. It will help you make informed decisions regarding your money. Cut down on expenses that aren’t essential right at the moment.
- Know the difference between ‘needs’ vs ‘wants’
You can’t go on buying everything that you like irrespective of whether you need it or not. For instance, let’s say you need bread at your place. You went shopping, but you ended up buying pasta, sauces, cheese slices, etc. This is the difference between ‘needs’ and ‘wants.’ The first instance where you bought bread is your need whereas the second instance where you bought pasta, and all is your want. Understanding the difference between these two can help you not spend money on unnecessary things.
Needs vs wants: How to budget for both?
- Determine your essential needs– The common expenses that usually falls under needs include housing, gas and electricity, insurance, transportation, etc. The essential needs are the ones without which you can’t live and work.
- Identifying wants- Identify the wants which you often buy for leisure or fun. The wants usually include designer clothing, entertainment, travel, gym memberships, etc.
- Trim spending on needs and wants- Now that you know which ones are your wants and needs, it’s time to trim your spending accordingly.
You can implement the 50/30/20 budget if you aren’t able to determine your wants and needs. That means you need to spend 50% of your budget on needs, 30% on wants and the rest on savings. Use a budget calculator to find out how much you have available for each category.
- Cut out unnecessary subscriptions
In this digital age, subscriptions are everywhere. Whether you want to watch movies or listen to ad-free music, there is a subscription for every activity. A one-off purchase may seem expensive, but it is more profitable in the long run. Subscriptions, on the other hand, require a fixed amount of money every month.
Thus, you should keep a regular check on all your subscriptions to ensure that all the subscriptions are important. Cut out unimportant subscriptions where you spend too much money from your regular payments. Consider the free or cheaper alternatives to the subscriptions. For instance, let’s say you have a gym membership, but you barely visit the gym. So, you can try out biking or jog instead. These are equally important sports activities that can improve your health.
Remember, subscriptions aren’t always bad. For instance, if a subscription of $10 a month for Netflix prevents you from going to the movies every week, well, keep using it. Figure out the subscriptions that are taking a toll on your savings and the ones that help you save. Decide accordingly.
Saving money is not an option but a necessity, especially when you are a college student. College is where you get the first taste of real independence. So, start saving money from now so that you can achieve your dreams in the future without having to encounter financial issues. The process isn’t easy. After all, it is easy to fall prey to temptations. But, you learn to resist the temptations and focus on saving every penny with care.