A student’s guide to money matters

Jim McCrane

Saving money is never a bad idea. Almost all students have something for which to save, whether it is for next year’s spring break, Christmas gifts, or to cover expenses between graduation and the beginning of a career. Anyone with any source of income (campus job, summer job, parents, etc.) can build up money for the future if they feel so inclined.

The most important aspect to saving money is that students have to have a reason, a motivation, to keep rather than to spend money on food, music, clothes and the like. Potential savers want to come up with a goal, which can be almost anything. Students can build a reserve fund for unforeseen expenses (for example, parking tickets), a gift fund for the parents, friends, or significant other, or a personal fund for things they want such as a nice new sound system for their dorm room. The possibilities are endless, but it is important to identify a goal as a motivation. Looking forward to spending the money on something big makes it much easier to hold onto the cash rather than spend it at King of Prussia Mall.

Once the purpose of saving has been identified, the next step is to find how much money and time is needed to accomplish the goal.

The estimate should allow for some flexibility in case of unforeseen circumstances such as not making as much money as planned from a job or needing more money to meet the goal. For example, I plan on spending about $300 total on Christmas gifts this year. Knowing that I’ll probably either overspend on at least one gift or simply become more generous as the giving season comes around, I’ll want to set a goal of $400, and I want to have this money by Dec. 1 so I can get started before everything sells out. After glancing at a calendar and counting, I see that I have about 39 weeks to get this money. Using the high-level math I learn as a finance major, I find that I will need to save about $10.25 a week to reach my goal. Most of us with jobs get paid every two weeks, so if I set aside $21 (rounding up) every paycheck, then I will not have to buy my Christmas gifts from 7-11 this year.

Getting into the habit of saving money is a very good idea. In this case, I use motivation to set aside just a small portion of my paycheck to be used for a much larger purpose. Even those of us who only work in the summer (for about four months) can save $400 by Dec. 1 by setting aside just $50 every paycheck.

Saving is easy when done consistently. When we feel motivated to hold onto money we make for a specific reason, there is less of a chance it will “burn a hole in our pockets” and cause us to spend it as soon as we earn it.

Anyone can save money for any purpose. The sooner students begin to save money, the easier it is to watch it grow quickly and to achieve whatever goal they set.

Getting into the habit of saving is a key to financial success later in life. Students who start now develop such habits quickly and are better prepared for the real world after college.