Having an emergency fund to fall back on is much cheaper than racking up high-interest debts on a credit card.
“For college students, [an emergency fund] can keep them from going deeper into debt when they encounter emergencies,” says Glenn Carter, personal finance blogger at TheCasualCapitalist.com.
Emergency money for college students is also a guarantee that their academic progress won’t be derailed by a happenstance of life. It can give you peace of mind, says Carter, and allow you to focus on studies without worrying about money issues.
How to save money in college for an emergency fund
Of course, the real challenge is how to save money in college when you’re on such a tight budget. With plenty of costs and limited income, most college students won’t have many — if any — funds leftover to build up an emergency fund.
“For college students living on a shoestring budget, it can seem impossible to save any money at all, but there’s always a way to sock a few extra bucks away each month,” says Daniel Bjarne, co-founder and CEO of study abroad site SchoolApply.com. Here are some ideas for how to save money in college and set up an emergency fund.
1. Decide how much to save
“Students live on a shoestring budget, but that also means that they don’t require a huge emergency fund,” Carter says.
Look at your financial obligations and figure out what you need to have tucked away to cover most emergencies. “You could get a flat tire and need to have your car towed,” Bjarne says. “You could need emergency surgery or dental work, or you could lose a part-time job and need to rely on savings for a few months.”
Carter recommends just a month’s to two month’s worth of expenses to start your emergency fund. And Phil Risher, founder of YoungAdultSurvivalGuide.com, suggests at least $500 as a minimum college emergency fund.
2. Get a side hustle
You might already have a part-time job, but picking up a side job can be a great way to earn some extra cash. Many side gigs are flexible enough that you can decide the time commitment you’re willing to make, without having to work full-time hours.
“The sharing/gig economy is great for students with flexible options to earn some extra cash,” Carter says. It gives even students plenty of options and avenues for extra income. So you can drive for a ride-sharing platform, like Uber or Lyft, or start an online hustle like tutoring or freelance writing, he says.
3. Break savings goals into smaller amounts
You’re not going to get a two-month emergency fund in place right away, but you can start working toward that goal. “The most important thing is that you set a goal to reach for in the next several months,” Risher says.
Break that goal into smaller chunks until it feels doable. Coming up with an emergency fund of $500 in a month probably won’t happen. But you can save $125 a month throughout a semester to build up to it.
4. Look for ways to cut expenses
College students are well-versed in living cheaply and cutting expenses, so hopefully, this is second nature to you.
Look for even more ways to lower or cut your living costs. For example, switching to a shared room instead of private one, skipping every other night out, or cutting back on entertainment costs and subscriptions are some ideas.
These are all small steps towards saving, but each one can help add to your emergency fund.
5. Sell unused stuff for cash
Another way to make some cash is by selling some belonging you no longer need — like old books, bikes, or entertainment gear, Carter says.
If you have an Xbox you’ve been too busy studying to play or a guitar you haven’t taken out of its case once this semester, those are both good options. There’s got to be some items around your dorm room to sell — and that could kick-start your college emergency money fund.
6. Save a little at a time
Most importantly, don’t get discouraged as you figure out how to save money in college. While it’s hard to see results at first, every bit counts.
“Even $5 is a start,” Bjarne says. “Put $5 to $10 a week into a savings account. It may not seem like much, but over time you’ll be surprised at how quickly it will grow.”
Saving money in college can be easier than you think. But having an emergency fund is key to staying on track to graduate and get your degree. That way, if any surprise expenses pop up, you’ll be ready for them.
7. Define what emergency means to you
The last thing to take into consideration is: what qualifies as a good use of emergency money for college students. These emergency costs are usually urgent, unexpected, and unavoidable. They fall under the umbrella of necessities, not wants. So think more along the lines of car repair than that new pair of shoes you really want.
Having this emergency fund in place will give you financial security and the ability to keep your college studies on course. It’s not meant to fund a last-minute spring break trip or cover the costs of daily social outings.
You’ll need to practice some self-control to ensure that your emergency fund goes untouched so it’s available for use when you need it. But when you finally do need it, you’ll be glad it’s there.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|