Tips for Creating a Money Saving Plan -for Students
Starting a money savings plan is a smart idea at any age, but the earlier teens and students prioritize saving, the easier it will be to make saving a habit.
Whether you are hoping to save some money for small purchases, like new clothes, or more significant purchases, like buying your first car, the way to success is by creating a strategic plan from the beginning.
It can be challenging for teens to find ways to make money, let alone figure out how to save it. To save, you need to spend less than you earn or receive. Be realistic about what your needs are and what are wants and wishes.
Ask yourself, why do you want to save? Then make a list of ways you plan to make income, how much you think you can earn, and when you expect to receive the funds, and mark this information down in a notebook or calendar. Go digital and use a spreadsheet and set reminders.
Make a list of what you must pay for (fixed expenses) like travel expenses and your cell phone plan, etc. Then add in other items you spend money on that are unnecessary (discretionary expenses) like eating out and going to concerts.
Start your savings goal by giving it meaning. Name your goal (e.g. a Trip to California) and focus your finances on achieving it. Then, track how much you’re saving. Any funds leftover can be added to an existing goal or used to create a new one.
Benefits of Saving Money – for Students
As a teenager, there are so many things to save for like new tech gear, special events with family and friends, travel, starting your own small business, and secondary education. Learning to manage your money while young will yield benefits throughout your life.
Specifically, learning to save will train you to keep more of your earnings for future financial goals, like saving for a down payment on your first home.
Having money saved will give you more financial independence. You’ll have the flexibility to buy things you want but don’t immediately need by putting in the time and effort to complete your savings plan. Invest in your own net worth by saving, and you’ll have greater control of your financial future.
Saving Plan Methods
Now that you know the focus of your savings plan, you need to decide what saving method to use. Here are three popular methods.
- Savings Account
This is a bank account that may earn a small percentage of interest. If you are younger than 18, you will need to ask a parent or guardian to help you set this up. It’s a good idea to keep your ATM card safely stored at home so you are not tempted to spend from your savings account.
- Savings Jars
A low-tech savings method is to take empty mason jars. Label them with your savings goal (e.g. new cell phone) and fill them up! This is a great method for visual learners. Seeing the jar fill up will you encourage you to keep saving.
A popular way to separate money-for-spending from money-for-saving is to create dedicated envelopes. When you get paid or receive funds, break down what you will use the money for and put those amounts in an envelope. Each envelope is marked for a specific purpose, like Dining Out, Shopping, and, of course, Saving! When the envelope is empty, that part of your budget is complete.
Pay Yourself First
Before you give others your well-earned money, remember to Pay Yourself First. This financial strategy makes saving a priority and involves allocating a portion of your income into savings before you do anything else with your money.
The easiest way to succeed is to automate payments to your savings account. You can set these up through your bank’s online portal. Choose a date that corresponds to when you expect to receive funds. When the money goes in, your automated payment goes out.
With your money out-of-sight-out-of-mind, your savings have time to grow. Continue to build your wealth by putting funds into investments, like a TSFA, RRSP, or GIC. Talk to your parents or financial advisor about how to set up these accounts.
Money-Saving Hacks for Students
Even if your income levels are low, there are simple ways to save money, especially if you are a college student living on your own for the first time.
- Look for student discounts where you spend. More money in your pocket means more money you can add to a savings plan.
- Take an inventory of items you own that have monetary value but that you are willing to part with, sell them and designate those funds to savings.
- Get thrifty. Instead of buying clothes and household items new, check your local thrift stores for vintage but stylish deals.
- Instead of going out to eat, bag your lunch and head to a no-cost cultural spot, like a public park or museums that have free-to-enter days.
- Take a short-term or seasonal job. Choose something that allows you to learn a new skill and build up your resume.
- Take the cash you get as birthday and holiday gifts and put their goodwill to good use in a savings plan!
Daily Money Saving Challenge
Looking for an easy way to save $365? It’s as easy as saving $1 a day for one year with the dollar-a-day challenge. This is a savings plan you can start anytime, not just on Jan 1st. Skip the latte, and give yourself a bonus of $5 every thirty days, and you’ll increase your savings by $60 to $425!
Other savings challenges:
• Save $1,378 with the 52-week challenge by saving $1 in week one, $2 in week two, $3 in week three, and so on until you hit $52 in the final week.
• If you are ambitious, try the 365-day challenge. Like the 52-week challenge, you save exponentially more each day, starting with $0.05 on day one. When the 365 days are completed, you’ll have $3,339 saved for your efforts!
Tips for Staying on Your Plan
- Reward yourself when you pass a milestone. Choose something small but meaningful and celebrate your successes.
- Find a saving buddy or make it a group challenge. Accountability can keep you on track.
- Give yourself a pass if you miss a day or week in your savings schedule. Setting it up by days and weeks instead of specific dates gives you flexibility. There are no failures, just a pause in your goal until you’re ready to restart. Life changes, so making your savings goals adaptable to change. It will make it easier for you to reach success.
- Consider reducing your spending as a savings goal. If you usually buy a drink or lunch out, reducing this type of spending, even if only once a week, can help you keep more dollars in your pocket.
Example of a Money Saving Plan
Kate needs a new laptop for college. Instead of borrowing the money from her parents or purchasing it on credit, she decides to create a savings plan.
- The Want: A new laptop – $750
- Timeline to Save: 6 months
- Expected Income: Kate has a regular part-time job earning $500/month split into two $250 payments per month that are automatically deposited into her checking account.
- Budgeted Monthly Costs: $495
- Fixed Expenses
- Monthly Bus Pass – $95
- Charitable Donation – $30
- Discretionary Spending
- Dining Out – $150
- Clothing & Personal Items – $120
- Magazines & Books – $100
- Fixed Expenses
Kate needs to save $125 per month to purchase the laptop. After reviewing her monthly spending, she decides to cut her spending on Dining Out and Magazines & Books by 50%. This will give her the $125 per month she needs to meet her savings goal while still enjoying time with friends and reading the latest bestseller.
Kate opens a separate savings account to make it easier to complete her savings plan. She creates an automatic bi-monthly payment of $75 from her checking account to her savings account to be transferred on her paydays.
In addition to her automated savings plan, she uses a mason jar to collect spare change. At the end of six months, Kate has successfully saved the $750 she needs to purchase the laptop, plus an additional $45 from her spare change collection, which she uses to buy a case for her new laptop.
Just Get Started with a Money Savings Plan
Creating a money savings plan doesn’t need to be overwhelming. By making some smart financial choices and dedicating time to budget tracking, you can meet any individual saving goal and make regular saving part of your lifestyle. To be successful you’ll need to start somewhere and the key to this is to just get started.
By: Robert Puharich | February 26, 2022 |