You’re a university student – is there any time or money to even think about starting and contributing to a savings account? On the surface, it doesn’t seem that it’s something that should warrant serious consideration. But part of what you’re doing in school is preparing for the rest of your life. Having a savings account – and making regular contributions – is one the best preparations you can undertake right now.
If you have a job, even part-time, now is a great time to start one, and here are a few reasons why.
Creating a habit that will last a lifetime
We often think that success in life is the result of talent, hard work, good connections, genetic or family advantages, or just plain luck. All can play a role, but even more important for most people is developing good habits. One of the best habits you can get into is saving money. The earlier you adopt the savings habit, the better off you will be financially.
Related: Student Budget Template
One of the biggest reasons why anyone becomes a millionaire is by saving and investing money very early in life. You’ve probably seen comparisons of how much more money you can accumulate in a retirement account if you start saving in your 20s rather than in your 30s or 40s. The same is true in any efforts to accumulate money. Start saving in your 20s and you may reach financial independence by the time you’re 35 or 40. But wait until you’re in your 40s to start saving money and you may never achieve financial independence.
The earlier you can embrace saving as a habit, the more you stack the financial deck in your favor. Saving even a little bit of money while you are still in school can set you up for a lifetime of good things from the financial realm.
Better to be a saver than a debtor
One of the biggest reasons people become lifelong debtors is that they never became savers. Debt sucks the life out of your finances; you’re always paying for yesterday’s obligations out of today’s income. That may keep you afloat, but it will never move you forward.
The only way to make financial progress is to steadily increase savings and investments.
Most people who have a lot of debt also have little savings. People who have a lot of savings typically have very little debt. Is there a connection? I think that’s self-evident. People who save come to rely on their savings. People who borrow come to rely on credit. Once you’re on that merry-go-round it’s tough to get off.
You can choose right now whether you will be a debtor or a saver in your life. Most university students automatically default to the credit side. You don’t have to. You can dare to be different. If you do, it will benefit you for the rest of your life.
Preparing for post-graduation expenses
In a way, when you save money you also prepare for life after graduation. You have expenses now that you’re in school, sure, but you’ll have them when you graduate as well. You’ll need a car, an apartment, and maybe even relocation money to pursue an out of town job assignment. If you have savings put away, you’ll be all set. If not, you’ll have to rely on credit.
The last thing you will want to do when you graduate is to add fresh debt on top of your school related debt. If you do, you will be creating a hole that you may not be able to get out of for years. Worse, you could be setting the pattern of being a perpetual debtor for the rest of your life.
Keeping a lid on debt
Let’s forget about your post-graduation life for a moment. As a student, you’re probably building debts right now. You may not be able to put an immediate stop to the borrowing, but you can minimize it. By building and relying on savings, even to a very small degree, you’re cutting back on the amount of debt you will carry into adult life. Every little bit of debt you can avoid will help later.
And there’s something else you’re doing when you can save money: you’re learning to live beneath your means. No matter how much or how little money you earn in your life, if you can’t live beneath your means, you will not be able to accumulate the kind of money that will build a comfortable and independent life.
If you’ve never thought about becoming a saver while you’re still in school, give it some thought right now. It could be the most important financial decision you will make in your life.