As you can see, there is an absolute cost of waiting to start a systematic savings plan. Time is a wasting asset – you can never get it back. By allowing your money to compound over time, it’s like financially paying it forward for your future goals. All you have to do is adhere to a systematic savings plan to provide the money.
Even on a college student’s budget it’s possible to find a way to put money aside into savings payday loans Albin. It starts with watching your spending. There are a lot of ways to cut back on the tightest of budgets, including:
- Buy a coffee maker to avoid the Starbucks temptation
- Forego cable – go with Netflix or Hulu instead
- Use student discounts – shop where discounts are available
- Don’t buy new text books – beg, borrow or rent instead
- Leave your car at home – avoid parking fees, insurance and fuel costs
- Dine in – if you’re on a meal plan use it; if not, stock your refrigerator with easy to make meals
There are dozens of other ways to cut back on spending. In creating a spending plan, have a goal of setting aside $10, $20 or $30 a week in a savings account. The key is to make saving your first expenditure of the month and budget around it.
Some banks have programs that allow you to automatically move a certain amount from your checking to your savings each month. Wells Fargo has round-up checking, which rounds your expenditures up and moves the excess into your savings account. For example, if you spent $4.40 at the grocery store, it is automatically rounded up to $5.00 and $0.60 is moved into your savings.
What to Look for in a Savings Account
The same criteria used for finding the right checking account applies to finding the right savings account – convenience, product fit, and fees.
Convenience
Ideally, your savings account should reside with the same bank as your checking account. You might be tempted to shop around for the highest yielding savings account, but for the extra .25 or .50% in interest you might earn, you would be giving up a lot of convenience which could make it harder for you to save. Most banks offer a savings plan that links to a checking account. The advantage of linked accounts is the ease of transferring money and the possible use of your savings for overdraft protection. Plus you can manage both accounts more easily through a single online platform.
Product fit
You may find that your options are limited based on how much you expect to save. Unless you are able to prime your new savings account with a lump sum of $2,500 or more, you should stick with accounts that don’t require a large minimum balance to waive the monthly fee. Some student savings accounts are created with very low or no minimum initial deposits or minimum balance requirements. In exchange, however, you shouldn’t expect the highest interest rates. At this point, you should value flexibility and convenience over the highest possible returns.
The only fee you really have to worry about is the monthly maintenance fee. Many banks waive the fee for student savers or they have a very low minimum balance requirement. Avoid opening a savings account with a high minimum balance requirement because the $10 to $15 per month fee can eat into your savings.
Opening a Checking Account
You will probably never see a bank representative any happier or friendlier than at the moment you ask to open up a checking account. It’s a very easy process requiring little time. You will need your Social Security number, your driver’s license, proof of student status and some references, such as your parents.