Ways to Start a College Savings Account
When your paycheck just barely covers your bills, you may think you’re too poor to save. Or maybe you’ve tried saving before, only to liquidate your savings for an emergency.
But building up a savings account doesn’t depend on living a stress-free life, or even making a lot of money. All it takes to start a college savings account are a few smart decisions and a little discipline. Here are five ways you put away more money as a college student.
Save For A Cause
Decide what you’re saving for – college tuition? Or maybe you’d like to save for a new car, for retirement, or your next vacation? If you answered “all of the above,” then create multiple savings accounts. Many banks will even let you name your accounts. Also, give yourself end dates by when you’ll save up the full amount for each. This step helps you visualize your goals. Keeping a single, nameless cash reserve for its own sake is fine, but nothing motivates like the prospect of a week in Hawai’i.
Pay Yourself First
It’s a common habit – as soon as we get our paycheck, we immediately pay our rent and other bills, and then live off whatever’s left over. Following this routine every two weeks might make you feel like a responsible adult. But it leaves out your most important creditor – you! Instead of paying everyone else first, what if you treat your savings account like your number-one bill? It takes some fortitude, but once you’ve done it a few times, saving money becomes a reflex.
Save Your Change
Using cash instead of credit cards means you receive small change. And those coins can really add up if you save them. Find a big Mason jar, a coffee can, or some other container and place it in a high-traffic area in your home. When your accumulated change begins to overflow, go to a CoinStar machine at the grocery store, and exchange it for larger bills. But don’t spend them! Deposit them in your savings account.
Reduce Your Bills
Most monthly expenses are based on usage. When you whittle down the amount of water, heat, and electricity you consume, you’ll see the change in your bill. Check with your phone carrier to make sure you’re actually using all your minutes and data. If you’re not, consider switching to a cheaper plan. And the distances you drive affect the amount you spend on gas. Have you tried carpooling or using public transportation? Smaller bills leave you with extra money at the end of the month, money that you can save for your future.
Ask your bank to set up an autodraft to move money from checking to savings automatically. If you’re like me, you hate to remind yourself to save money. That’s why autodraft works. It shifts the work from your brain to your bank. The more frequently these transfers happen, the more your savings will expand. Set any amount you like! The key is to automate the process so that you don’t have to stress over it. But be careful –- a few banks still charge a fee for this service. And don’t start autodraft if there’s any risk of insufficient funds. Those overdraft fees only defeat the purpose of saving in the first place.
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As a college student, you’ve got a big future ahead with lots of goals. Some of those goals will take money, so why not save for them now? Follow these steps, and watch your savings grow.
Written by Michael Mussman
Michael is Editor of Forward Thinking, the Ashford University blog.