It’s a struggle to achieve financial stability, more so when you’re a college student who depends on a monthly allowance from your parents. Even if you don’t have to work to pay for your school fees, there are other things you’ll need to spend on, like projects, mandatory school trips, books, school supplies, and more.
When asking for more money from your parents is out of the question, it’s up to you to make things work with a limited allowance. You need a money-saving plan that’s considerate of your needs as a student.
How can you save money when you have very little of it to begin with? We have seven answers for you.
1. Learn to budget properly
Creating a budget is a given and the most basic part of personal finance management. Students should do it the moment they start receiving an allowance, and college students should already have budgeting down pat.
One popular budgeting technique is the 50-30-20 rule, which allocates 50% for needs, 30% for wants, and 20% for savings and debt payments. It is a simple guideline that works for independent and working adults. Let us, however, be realistic: most college students have spending patterns that are incompatible with this rule.
Consider that it is customary in the Philippines for parents to support their children’s college education. Those who live at home don’t need to buy food or pay utilities. Those who stay in dorms paid for by their parents also get food allowances.
When you can get your basic needs for free, allocating 50% of your allowance to food could be too much. It would make more sense to set aside this portion (or more) of your allowance for school-related expenses, like books, school supplies, photocopies, contributions for group projects, etc.
Budget your allowance according to your needs as a student. But no matter how you slice the pie, you should have a fixed amount per month that goes to your savings.
2. Avoid unnecessary expenses
What wrecks a well-planned budget? Indulging and spending more than what you allocated for your needs and wants. It is one of the biggest obstacles to saving money as a student. Even older adults have a hard time sticking to their budgets. To help you stay on track, here are a few tips on how you can save and avoid spending on unnecessary things:
- Plan and prepare your own meals whenever possible. Yes, you’ll need to find time to cook, but you’ll get to save more than if you just take out fast-food or eat at restaurants. If you don’t want to cook every day, do it on Sundays and once more in the middle of the week. Cook huge servings so that each dish will be good for two or more meals.
- Buy your staple food in bulk. For example, if you often eat oatmeal or cereal for breakfast, buy the 1 kg bags. They’re often cheaper than the sum of three 300g boxes. Stock reasonable quantities of your food, though. Remember that spoiled food is money down the drain.
- Use your old furniture and old appliances at home instead of buying brand-new ones. The same goes for pillows, blankets, bed sheets, indoor slippers, bathrobes, and other personal effects. They may not be as expensive as furniture or appliances, but their accumulated cost could still be a blow on your budget.
- Keep your tastes simple. There will be time and opportunity to indulge in Starbucks fixes later when you’re finally earning a salary. But in the meantime, find affordable alternatives for things you can’t live without, like coffee and personal care products.
- Stay at home on the weekends. It’s almost always guaranteed that you will spend money the moment you leave your house or dorm.
- Walk whenever possible. Public transport, taxi, and ride-sharing fares can take up a large chunk of your monthly budget. Walking will help you save a couple of hundred each month, money that you can add to your savings. On a related note, plan your errands so that you can reduce the number of trips you need to make to and from your home.
- If you feel a strong urge to buy something expensive, sleep on it. Revisit the idea a couple of days or weeks later, and if you still want to get the item, incorporate it into your budget. Sure, you can ask your parents to foot the bill, but that would defeat the purpose of learning how to save money as a student. Besides, you’ll enjoy an object more if you worked hard to buy it.
- Conserve water and electricity. This is a must if your board and utilities are billed separately. Kill the habit of leaving the lights on in your room when you leave it, and keep your showers short.
- Keep an eye out for free events at school. Just because you can’t go out with friends every Friday and Saturday night doesn’t mean you can’t have any fun. Scope out university-organized events and open-to-all activities of different college organizations.
- Don’t be shy to ask if an establishment offers student discounts. They’re common among establishments near university campuses. If you don’t ask, you’ll miss out.
3. Open a separate account for your savings
It’s unfortunate that our country still has much to improve on regarding financial literacy. As of 2017, only 22.6% (15.8 million) of Filipino adults have bank accounts. As our country’s future economic lifeblood, you need to do better than the over 77% of today’s adult population—starting by opening a bank account.
This is one of the first steps in financial management. From here, you’ll learn about the various financial products and services offered by banks and how you can make the most of them. The immediate advantage is you can deposit your savings and keep it intact for emergencies. If dropping P10 coins or P50 bills in a piggy bank encourages you to save more, do it; but at the end of the year, deposit your savings in your bank account. Keeping your money out of sight (and your grasp) is a simple yet effective way of ensuring your savings stay untouched.
4. Use a mobile app for logging expenses
Logging your expenses is one of the most underrated but effective tips on how to save money in college. An expense journal gives you a clear picture of your spending habits. You’ll know exactly where your money goes, so you’ll also know where to exercise more control.
You can do this the old-school way of writing down all your expenses for the day in a notebook. You can also create an Excel document on your computer or phone. Mobile apps created specifically for logging expenses, however, are the most convenient. It only takes a few seconds to record an expense, and you can view your total spending by day, week, month, or category. You’ll know at a glance how much you have left in your budget for taxi rides, food, leisure, and so forth.
5. If you can’t pay for something full in cash, don’t buy it
It’s a simple rule, but one that can save you a lot of money. These days, customers can buy mobile phones, gadgets, clothing, and other high-priced items by installment even if they don’t have credit cards. It’s convenient and even helpful at times, but the privilege can tempt you to keep buying things you don’t need. You (and your parents) could end up with a hefty, accumulated monthly bill before you know it. By pledging to buy only when you can pay the full price in cash, you can save your money and stay debt-free.
Remember how we stressed the importance of setting aside a fixed amount for your savings? One way to do it is to invest your savings in the stock market or in high-interest, time deposit accounts. Depending on the terms of your investment or savings account, you may get the returns on your investment through monthly or annual dividends.
Financial advisors recommend augmenting savings with investments if your long-term goal is to grow your wealth. Now if you think that it’s too early to think about investing when you’re still in college, consider the rule of thumb for investments:
Invest early, invest little, and you’ll get more. Invest late, and even if you invest more, you can still get less.
This happens thanks to compounding interest, which is the increasing value of an investment asset thanks to the interest earned from the sum of the capital and the accumulated interest from the previous period (also referred to as “the interest on interest”.) This is why a five-year investment that’s allowed to mature for the next 35 years could earn more than a 10-year investment that starts five years later (given that both have the same annual percentage yield or APY).
7. Hustle on the side
Having touched on wealth building from investments, it bears mentioning that the best way to increase your savings is to have an income on top of your allowance. It is a must when the prices of goods, transportation, utilities, and other everyday needs are increasing faster than the average national salary.
Rather than accept this rather bleak picture of the future, college students who’re about to enter the employment market would do better to develop an entrepreneurial streak and make a profit from your passion.
Explore talents, hobbies, and interests that could become a lucrative side hustle. It’s good to start with something you’re good at because it brings the element of fun—a necessity considering how tiring it can be to manage school and sell your creations or go on gigs at the same time.
Of course, you can also work part-time for establishments like cafes, retail stores, food service businesses, and more.
Use these seven (plus!) tips to refine your saving strategy during your years in college. Turn them into habits, and you’ll reap the benefits well into your adulthood.
At Money Wise, it is our mission to help more Filipinos become financially savvy. We offer insightful articles on personal finance, insurance, and savings and investments as well as sound business advice. Get started on your financial literacy journey today.