The Benefits of Saving
While saving may not be a top priority for many college students, getting in the habit of regularly setting money aside for emergencies and other financial goals is a smart move.
To help you visualize the benefits of savings, try out this nifty savings calculator by following the steps below:
- Enter an amount you think you can afford to save each month.
- Type in the estimated interest rate you expect to receive.
- Plug in the number of years you plan to save.
- Then hit calculate!
The rewards are pretty clear. Saving $250 a month for 5 years at an interest rate of just 1 percent, will grow to over $15,375! That’s a nice financial cushion for an expected emergency, a down payment on a more reliable car or to put towards your other financial goals like buying a house.
Most financial planners recommend setting aside at least 10 percent of your income for savings, but that may be difficult for most college students struggling to make ends meet. So here are a couple of suggestions to help you along:
- Pay yourself first by putting aside a small amount of each paycheck before paying your bills, even if it’s just $10.
- Save an amount equal to whatever you spend on things that you really don’t need such as coffee or fast food. (Yes, piggy banks are still cool!)
- Track your daily expenses for two weeks to find ways to cut back on expenses; make a pledge to save this “found” money.
- Discuss gift-giving limits around the holidays with family and friends. They may appreciate it and benefit from this as well.
- If you know you will be receiving a financial aid refund next semester, plan a budget on how you will spend this money. Even better, save some so you won’t have to borrow as much next year.
Developing good savings habits now will pave the way to avoiding debt, meeting your lifestyle goals and enhancing your chances of someday retiring comfortably. If you have any savings strategies to share, we’d love to hear them. Simply post a comment right here on One for Your Money.