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When you think of ‘students’ and ‘money’, two stereotypes probably spring to mind:
- You’ve got your brassic student living off super noodles and weird pasta concoctions
- And you’ve got your ‘buy it now, worry later’ student racking up debt and blowing through their overdraft
In either case, your immediate presumption isn’t that of a financially savvy individual.
Of course, there are always exceptions to this but generally speaking (and from personal experience!), university is typically a time for living carefree and enjoying life without worrying about money before entering the world of employment.
But money management is important and there are lots of reasons why students should be concerned with their finances.
In fact, there are many benefits of saving for students.
Table of Contents
Why is it Important for a Student to Save Money?
Going off to University in many cases, is a young persons first real opportunity to experience some independence.
It’s therefore important to learn the tools needed to save money now, to ensure the best start to adult life when student days are over.
Being a student is a sort of limbo between still being a child, but being able to make the choices of an adult and it’s critical that those choices are the right ones to avoid impacting the future.
How to Save Money as a Student
Create a Budget
The first step for anyone trying to save money, not just students is to create a budget.
Until you know exactly what is coming in and needs to go out, you won’t know how much you can afford to save or where you can trim fat to create more savings.
Get a Job
You might not feel like you have time for a job between all the studying and social events, but a part time job could be very beneficial.
Not only will it give you some work experience to put on your CV when you leave university, but it’ll give you more money coming in.
And the more money that comes in – the more money you can save.
Side Hustle
If your schedule really doesn’t allow for a part time job, a side hustle could be the right option for you.
There are lots of things you could fit around your studies such as:
The possibilities are endless.
You might also enjoy…The Best Side Hustles UK
Spent Smarter
Student discount is offered in many outlets, whether they advertise it or not – so it’s always worth asking.
Plan your nights out around student nights and happy hours to save money and drink with your friends at home first.
Need a new outfit? Head to Vinted and buy something second hand. A bargain for you and good for the environment too!
What Should Students do with Savings?
Savings should act as a buffer while you are a student so where you put your savings needs to make financial sense.
Investing is great – but if you find yourself going deeper into your overdraft and relying on credit cards while your money is locked away somewhere, then it’s probably not the right choice for you right now.
That said, the earlier you start investing – the better, so there’s no harm in starting to put small amounts away for the future now.
The ideal solution for a student’s savings would be:
- An emergency fund (the amount of which makes sense to the individual’s circumstances – it could be £100, it could be £500).
- Instant access savings – things happen, student loans don’t always go to plan and part time employment hours may need to get cut to accommodate study loads – so it’s important to have some money to fall back on.
- Investments – once the first two are checked off, start thinking about locking some money away for your future.
Benefits of Saving Money for Students
We know the how’s and the what’s; so now let’s take a look at the why’s.
Here are the benefits of saving money for students, and why you should do it.
Promotes Good Money Habits
Saving doesn’t come naturally to a lot of people. But it is something that can change over time.
If you’re the kind of person whose money burns a hole in their pocket, then taking the action of saving something every month, will train your mind to see saving like any other bill that needs paying.
And the more you do it, the more naturally it’ll come.
So if you start saving just a few pound each month while you’re a student, you’ll have already built up the habit for when you reach employment and can afford to save more.
Acts as a Buffer
A student’s income can be quite sporadic.
Hours worked in a part time job will depend on how intense your study load is and even with the best will in the world, sometimes student loans and bursary applications don’t quite go to plan.
Having some savings will help if you find yourself in the situation where money doesn’t come in when it should.
Instead of maxing out your overdraft and credit cards and leaving University with stacks more debt, you’ll have your own money in the bank to fall back on.
Puts Future You One Step Ahead
If you save while you’re a student and avoid the trap of credit cards, overdrafts and BNPL schemes – you’ll be one step ahead of your peers when you leave education.
Student loan debt doesn’t quite impact us here in the UK the way it does our US friends, but still young people here find themselves in crippling debt when they leave university.
This is because credit is so accessible for students and yet they have no real means for paying it back.
Saving while you’re a student and avoiding the debt trap means that when your peers are paying off their debts before they can start planning their future, you’ll already be in a position to save for a mortgage or whatever your big goal is.
It Can Tide You Over
In an ideal world, you’d fall straight into a job after graduation. But unfortunately it doesn’t always work like that.
In 2020, the graduate employment rate was 86.4% – doesn’t sound too bad eh? But what if you make up part of that 13.6%?
Having a degree doesn’t guarantee you will fall straight into full time employment and the reality is the job hunt could go on for months.
Having some money saved in advance will help you weather periods of unintentional unemployment.
Gives You Options
Having some money in the bank can really open doors for you.
We are encouraged to take risks and live our lives to the full while we’re young, but if that YOLO lifestyle comes at the cost of accumulating huge amounts of debt then older you doesn’t really stand a chance.
Want to travel the world a bit? Go for it, but do it in such a way that you won’t spend the next 20 years paying it off.
Budget, spend smartly and save as much as you can to do the things you really want to do.