Do You Use Your Savings Account As A Chequeing Account?

As a recent graduate from university I discovered very quickly that I did a poor job at managing my finances as a student. This has become a near “universal” truth for university students. I entered the workforce with a large amount of student loans, a low credit rating, and a savings account with a grand total of 92 cents. Not exactly the most ideal situation.

The balance in my savings account was one of the biggest mistakes I made when preparing myself for life after school. While I never had a true full- or part-time job as a student, I held a lot of odd-job, resume=building positions. The pay wasn’t fantastic but I listened to my parents and put that in my savings account for emergencies. However I tended to disregard the key definition of a savings account, which was actually saving the money. I treated the account like a second chequing account and routinely withdrew money for “emergencies”.

Define “Emergency”

emergency savings
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An emergency for a student is very different than a normal crisis.  Not having enough money for a case of beer can constitute an emergency in the “right” circumstances. On the other hand being a couple days late on a credit card payment doesn’t seem so bad.  I learned very quickly in my first loan meeting after graduating that it should have been vice versa.

My personal goal after finding a job once leaving university was making better financial decisions which I believe I am taking the proper steps toward. Speaking with a financial advisor and laying out a proper budget was one of the best decisions I have made since leaving university and I will continue heading their advice.  The next step towards that was actually listening to the “saving” portion of a savings account and putting away money from the future. It never has to be a large amount but it adds up fairly quickly so I am building the habit of paying myself a small amount (~10%) and have included it in my regular bill paying schedule.

One Small Step For Students…

I am taking baby steps into the world of fiscal responsibility but the simply action of paying “bills” to myself has opened a large world of financial opportunity for me. I can now look into things such as Tax Free Savings Accounts which in itself opens up even more doors.

The key thing as a student though is finding the balance between having an active social life and being financial sound. I pursued an active social life while ignoring things such as savings account. While I have very few regrets for making this decision I found very quickly that I should have had that balance.  I still tend to be a bit of an impulse buyer but am a lot happier knowing that I am gradually building a nest egg in the background in case of true emergencies and not the lack of beer in the fridge for a night out.

Saving is Next Godliness

As for the students out there an easy way to curb excessive spending from a savings account is with a set up like one of the useful easy access savings accounts. All students will have a basic understanding of interest and savings accounts upon entering university.  The first step is to have that account to put money in there on a regular basis, even small amounts. By getting in the habit of putting a little bit away then you’re already off to the races!  Most savings accounts have limitation on how often you can move money out of them so its important that you are serious about saving money. Otherwise you could be getting multiple fees which will eat into your savings.

At Birmingham Midshires they allow you easy access to your savings accounts for withdrawals yet at the same time offer incentives for using the account as little as possible.  By making less than four withdrawals a year you maintain a higher interest rate on your savings with bonuses after the first year for maintain a balance. If there is one thing I know about University is that every student likes getting things for free and money is definitely at the top of the list.

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Most students starting university have a remedial understanding of savings, interest, and personal finance. A basic understanding at best. And unless they take it upon themselves to learn, those habits often don’t change. The educational system has truly failed us when it comes to PF. High schools need to start mandating a course where students learn budgeting, savings, etc. I’m approaching my late 20s and even now I see friends crippled with more and more debt.

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