How to Save Money in College: 3 Tips to Help Students

So in this article, we’ll focus instead on three strategies that could help you prioritize saving in college.

1. Create a budget to understand your cash flow

Putting together a budget can help increase your chances of reaching your savings goals. If this is your first time working with a budget, start simple—even the most basic budget can help you see where your money is coming and going each month (or each quarter/semester).

Budgeting doesn't have to feel like a chore. There are plenty of budgeting and money management apps out there that can create a budget plan for you and help track your income, expenses, and financial accounts. Explore your options and see if there’s one with features that appeal to you. Look for an app that’s easy to use and makes sense for your needs.

Once you have a budget in place, you can better visualize your money habits and get a sense of how much you could save each month. Everyone’s financial situation is different. Whether you’re able to save a little or a lot, the most important thing is to get started. The sooner you start, the more time you’ll have to let the power of compounding do its work.

Read more: Check out our article on the different budgeting methods you can use depending on your goal.

2. Consider opening a high-yield savings account

By the time you get to college, you may already have a checking account in place. And if your parents have drilled in the importance of saving money regularly, you may already have a basic savings account too. But now that you’re on your way toward adulthood, it’s time to think about graduating to a high-yield savings account. 

A high-yield savings account is a type of deposit account that usually offers a higher APY than traditional savings accounts, which means you could earn more money on your money.

Because you can add and withdraw money with ease, high-yield savings accounts can be a great tool to support any short-term goals you have in mind. For instance, maybe you’re looking to build an emergency fund, upgrade your laptop, or save up for spring break.

How to open a high-yield savings account

You can open a high-interest savings account at a variety of financial institutions including online banks or a credit union, but make sure that you do so at a FDIC member bank, where deposits are insured up to the maximum allowable by law.

Currently, the standard insurance amount is $250,000 per depositor, per FDIC-insured bank, for each account ownership category.

It’s a good idea to do some research and comparison shopping to find an account that offers a competitive rate and the right bank for you.

Here are a few key things you’ll want to consider:

• Is the account FDIC insured?
• Is the APY competitive?
• How often does interest compound (aka, compounding frequency)?
• Is there a minimum balance or opening requirement?
• Are there any account fees?

3. Automate your savings

There’s a lot of things to keep track of when you’re in college: class schedules, assignments, meal plans, etc. But saving money shouldn’t feel like additional homework—this is where automating your savings can help.

Many savings accounts offer an automatic deposits or transfers feature, allowing you to schedule recurring transfers between accounts—for instance, from your checking to your savings account.

Setting up automatic deposits can help you build your savings (and good money habits) without having to think about it.

If you’re working in college, consider scheduling your automatic deposits based on your pay schedule (e.g., direct deposit from your employer). That way, every time you get paid, you get into the habit of saving a portion of that paycheck automatically.

It’s a smart way of “paying yourself first,” where you’re essentially funding your savings goal(s) before you have a chance to spend that money on something else. Even if you can only save a modest amount, that’s OK. When it comes to saving, consistency is key.