Building a Strong Financial Foundation in College

College is an exciting time filled with new experiences and opportunities. It’s also a crucial period to start building a strong financial foundation. At O1ne Mortgage, we understand the importance of financial stability, and we’re here to help you every step of the way. Call us at 213-732-3074 for any mortgage service needs. In this blog, we’ll explore the best ways for college students to save money and develop healthy financial habits that will benefit them for years to come.

Choosing the Right Savings Account

One of the first steps in building your financial foundation is choosing the right savings account. You have two main options: a traditional savings account or a high-yield savings account. The best choice depends on your needs and preferences.

If you prefer banking in person and need to deposit cash regularly, a traditional savings account at a bank or credit union might be the best option for you. However, if you are comfortable with online banking and want to take advantage of higher interest rates, a high-yield savings account with an online bank is a great choice. These accounts offer significantly higher interest rates, allowing your money to grow faster.

Pay Yourself First

One of the most effective ways to save money is to pay yourself first. This means setting aside a portion of your earnings for savings before paying any other bills. For example, if you get paid on the first of the month, set up an automatic transfer to your savings account on the second of each month. This way, the money is not readily available to spend with a debit card.

Some employers allow you to split your paycheck into multiple accounts, so you can direct a portion of your income directly into your savings account. This habit will become second nature as you get older, ensuring you always have savings for emergencies and long-term goals.

Automate Transfers

Automating transfers from your checking account to your savings account is a great way to keep your savings growing. You won’t have to remember to transfer money each month, and you’ll feel a sense of accomplishment as you watch your balance rise. Set up a recurring automatic transfer once a month or each time you receive a paycheck.

If you have a specific goal, such as buying a car in two years, break down how much you’ll need to save each month to reach that goal. Even saving a small amount each month, like $20 or $50, can make a meaningful difference over time.

Find Ways to Add More Funds

While your primary focus in college is studying, working part-time can provide you with extra spending money and help you save. Consider taking on a work-study job on campus, tutoring, proofreading other students’ papers, babysitting, pet sitting, or selling crafts or art you make in your free time.

If working during the school year isn’t possible, use the “pay yourself first” concept for summer earnings. Transfer as much as possible to your savings account as soon as you’re paid, so you don’t have immediate access to the money.

Stretch Every Dollar

Being conscious of how you spend your money can help you save more. Always ask about student discounts and use these tips to create a budget that supports your savings habit:

• Know how much you spend: Review your checking account or credit card statement for the past two to three months. Note your spending on essentials like food, utilities, housing, transportation, entertainment, and school supplies. Identify any areas where you can cut back.
• Choose a budgeting method: Test out different budgeting methods to see what works best for you. A popular method is the 50/30/20 rule, which allocates 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment.
• Cook in big batches: Save money by cooking meals in bulk and freezing them. This reduces the temptation to order takeout and helps you stick to your budget.
• Opt for used over new: Consider buying used items like furniture, clothes, books, and electronics. Online marketplaces and student union fliers are great places to find deals.

Up-Leveling Your Finances During College

College is an ideal time to build strong financial habits that will serve you well in the future. If you can save money on a tight college budget, you’ll be well-prepared to save for retirement, a house, and other goals once you’re working full-time. The amount you save in college isn’t as important as developing the habit of saving and understanding how empowering it can be.

Additionally, college is a good time to start building your credit. A solid savings account combined with a growing credit score can help you when it’s time to rent an apartment, buy a car, and more. If you haven’t started using credit, consider using tools like Experian Go™ to establish a credit profile and begin your credit journey.

At O1ne Mortgage, we’re committed to helping you achieve financial success. Whether you’re looking to save for the future or need assistance with mortgage services, we’re here to help. Call us at 213-732-3074 for any mortgage service needs. Start building your financial foundation today and set yourself up for a prosperous future.