We’re college students. We spend money. A lot of us struggle to work multiple jobs, all the while balancing homework and studying with our social lives, our health and a little relaxation time in between! Once we finally reach this truly independent stage in our lives it can be tough to manage added monetary responsibility, but I promise you it doesn’t have to be difficult. If my father taught me anything growing up, it was the importance of saving and investing. Without my dad’s “saving and investing 101” anecdotes, I really would be a broke college student! (So, kudos to you dad!)
Now I want to share these basic strategies with you. Money can be tricky – I understand the fear – but there are easy options for college students like us to save and invest responsibly.
A deposit account (savings account) is a simple account that we can use to store money that we aren’t planning to use for everyday expenses. Depending on one’s bank, certain savings accounts pay customers higher interest (a percentage of the amount on deposit), and while it might only be pennies a month…those pennies add up!
This basic account is the safest bet for anyone worried about the risk of investing money in stocks, bonds or mutual funds. Honestly, everyone should have a savings account of some sort. It is best to budget your expenses and set aside a portion of your income every month for savings. You never know when you might need that money in the future, and it’s always good to have that safety net there to catch you when you fall!
So, if that means skipping a night out once or twice a month or choosing to shop at your local grocer instead of solely the organic produce store, then do it! Your future self will thank you. As college students with limited budgets, we need to be conscious of everything we buy. We certainly deserve to have fun and treat ourselves, but it’s all about balance.
Why have a savings account?
· You can withdraw your money at any time – that safety net is always there!
· Sometimes you might save on fees or charges on your checking account, as long as you maintain a certain balance in your savings.
· Bank savings are FDIC-insured up to a certain amount, so you don’t have to worry about your bank burning down tomorrow and losing everything that you had!
Why not have a savings account?
· If you’re ready for a little more risk, or if you really don’t need your money for a while, then a money market fund or a cash deposit (CD) might be the account for you!
· Other accounts charge higher interest than the basic savings account…so that means more pocket change for you!
· Fees are tricky – make sure your bank isn’t charging you money if you don’t meet the minimum balance requirement.
Soon enough we’re going to be house hunting, paying our own bills and insurance fees, and our parents won’t be there to help us along every step of the way. I personally find satisfaction in knowing that I am beginning to budget and save for the future… it’s gratifying to know that I am working hard for my education and managing multiple jobs every week to earn extra cash. I, like many students today, had to take out loans in order to finance my tuition. Everyone fears the word “debt,” but I believe in the value of my education and degree, and we all should!
It’s completely possible to invest our money now – just look at the endless possibilities in the stock market! – and earn a higher return on that investment which will cover and even exceed the interest charged on our student loans. Every dollar invested, if invested wisely enough, can fetch a greater return.
Now I realize this terminology becomes confusing, and there certainly is risk involved with investing in the stock market. So for beginners, every college student needs a basic savings account. Furthermore, I suggest that every student begin to study the market and look into other saving and investment strategies. This doesn’t mean you need to start investing now, but at least educate yourself for the future. Again, your future self will thank you!
There is a multitude of different options out there, and every bank has something slightly different to offer. You won’t know what you’re missing until you ask – so start budgeting today. Set aside a little more money every month. Spend responsibly and consciously. Keep things balanced. Treat yourself on occasion. And listen to your parents – they know what they’re talking about…most of the time!