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.
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