Building savings into your budget

Okay, if I were a college student, I think I’d be sputtering right now: “Saving? Saving what? I’m borrowing money just to live!”

But hear me out.

It’s tough to manage your money when you’re in college. Borrowing thousands of dollars can feel overwhelming—and creating a game plan for paying it back can feel impossible when you don’t know what life holds after graduation. It’s no surprise that some students would rather put off even thinking about finances until after graduation.

A better solution? Treat your borrowed money just like you would your earned money, and start creating habits right now that you want to have in place when you graduate. And that includes saving.

You probably don’t plan to spend every penny you earn once you’re in the working world—so don’t plan to spend every penny you borrow for college, or earn at your part-time job. Build savings into the equation from day one.

If you’re earning a paycheck, try to skim some of it into a separate savings account right off the top. Better if you can do this automatically, so you never see the money in your primary account.

As for your loan money—try doing the same thing. After your tuition, room and board are covered, try dropping some of it (maybe shoot for 10% to start) into a savings account and see where that leaves you for the semester. At this point you’ll want to work out a budget, listing every conceivable expense for the rest of the semester. If it appears your expenses will be covered, look at this savings account as a “rainy day” fund—something besides a credit card to fall back on when you have an unexpected expense.

Once you’ve got some “off-the-top” savings building, look for other ways to save:

Re-assess your big expenses first.

Housing costs. Could you get a cheaper place, or take on another roommate? As things shake up at lease-renewal time, give serious thought to how you might save money in this area. Trimming your housing expenses is a quick way to put some serious cash back in your pocket.
Transportation. Cars are inherently expensive—even if paid for. Gas, parking, and repairs all add up. If these expenses are up to you, consider how to cut back. Public transportation, walking, and biking are all things to consider if you’re driving a lot.

And remember that the little things add up.

Look over all your monthly expenses with fresh eyes. Do you need a cable or satellite dish package or could you ditch it and go with a cheaper monthly movie subscription service? Are you eating out or buying coffee too often? Cutting back on simple food expenses is a quick way to save $10 a week or more.

About Caroline Hanson

Caroline is a communications consultant for Wells Fargo Education Financial Services. Although she has been known to forget her own ZIP code, she has memorized the lyrics to every bad 1970s pop song ever written. Unfortunately, she also loves karaoke. Caroline spends her spare time at Target®. She also likes biking slowly and has participated in RAGBRAI. Caroline is a graduate of Iowa State University and has worked in journalism and public relations for the past 14 years. She lives in Iowa with her husband and has a 19-year-old stepdaughter and 2-year-old son.
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One Response to Building savings into your budget

  1. Anonymous says:

    One idea for trimming expenses at home is to ditch the bundled cable subscription. Considering most new run shows pop up nearly the next day on the shows’ websites (or on Hulu), you can easily avoid the added expense of cable television and watch the shows online. And related to the expense of cable service is maintaining Internet access at home. Paying for high-speed Internet access a la carte is typically cheaper than purchasing the cable company’s “bundled” service of cable tv, phone, and Internet access. And if you want to go really cheap, see if you can find a neighbor running a WiFi setup with a strong enough signal you can access from your place. Offer to pay part of his monthly Internet bill if he’ll let you latch onto his WiFi signal. Or, use your campus’s student WiFi access, or the local coffee house, or even your apartment complex business center’s free WiFi access, if offered. Point is, there are a number of places you can access the Internet without paying for a high-priced home set-up.

    Although public transportation and riding a bicycle are always good options, consider a motor scooter instead of a car if you must have gas-powered transportation. They’re cheaper, registration, insurance, and repairs are far less expensive, parking is easier, and many models get nearly 100 mpg. Plus, they’re fast enough to get you around town quickly when public transportation and bicycling aren’t workable options.

The Student LoanDown

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