5 Money Saving Tricks for Students and Young Adults

If you’re a student or recent graduate and finding it difficult to save money, you’re not alone.

Many of your peers may be working part-time or just starting their careers too. Just having your first real paycheque is a big deal, so you shouldn’t be hard on yourself. That said, saving more money now can have a profound impact on your financial future and the saving habits you learn can have a lasting effect on your life.

Here are some of the best tips and tricks that you can apply to start saving more.

Create a budget.

No matter your age, having a budget is essential since it’ll give you an accurate look at your finances at any given time. Start by tracking your expenses for a few months. What you’ll want to do is write down or log everything you spend money on. By doing this for a while, you can see exactly where your money is going. You may quickly realize, for instance, that you’re spending more than you’d like on things you don’t necessarily need. By cutting these out, you can put more towards things that matter, like savings or that trip you always wanted to take.

When it comes to creating your budget, you’ll want to list your after-tax income at the top. Follow that up with your fixed expenses, like rent, groceries, student loans, etc. Below that, list out limits for fun things like entertainment, take out or even gifts. By having a budget in front of you, you can make adjustments as needed – just make sure that it’s realistic and takes your lifestyle into account. No one is expecting you to stay on budget every month, but you’ll need one to keep you on the right track.

Pay yourself first.

With a budget in place, you may want to consider paying yourself first. What this means is that you’ll build savings, like an emergency fund, your retirement savings or a down payment for a home, right into your budget. If you prioritize them as one of your fixed expenses, you’ll essentially be paying yourself first since you’re putting savings ahead of your fun expenses.

To make things easier, set up an automatic transfer from your chequing account to your savings account on the day you get paid so you never miss the money. It doesn’t have to be a lot of money you’re saving. Even putting aside just $25 a month to start can make a significant difference. As you adjust to your new budget, or earn more money, you can slowly increase the amount you’re saving too.

Avoid debt.

Generally speaking, you should try to avoid debt as much as you can since the interest payments you’ll be making can set you back. The one exception to this rule is student debt, where the hope is that higher education will lead to a higher income.

Credit card debt is typically one thing many new graduates struggle with. While there’s no denying the convenience of credit cards, the interest rate often exceeds 20%. It’s very difficult to save money when you’re paying that much interest. There’s nothing wrong with using credit cards. Just make sure you’re paying off your full balance by your statement due date.

Watch out for excessive fees.

Once you graduate, you’ll quickly realize that fees can creep up on you. One good example is banking fees. As a student, these fees are typically waived. However, once you graduate, you’ll be transitioned to regular bank accounts, which come with monthly fees. These fees can add up, which is why you’ll want to see if there’s any way to get your account fees waived by maintaining a minimum balance. You may also want to consider switching to a no-fee online-only bank.

While not exactly fees, you may also want to keep an eye on some of your monthly recurring expenses, like your cellphone bill or subscription services. These monthly costs are easy to forget about and can add up to quite a bit. Renegotiate your wireless plan whenever you can and consider cancelling some of your subscriptions since it’ll free up some of your cash flow.

Take advantage of employee benefits.

If your employer offers additional financial incentives as part of your overall compensation package, it’s in your best interest to take full advantage of it. One common benefit is a defined contribution pension plan. That’s where your employer would match your retirement savings contributions by a certain amount. For example, they’ll match up to 2% of your salary.

Another example is employee stock options. Some employers will offer stock to their employees at a discounted rate or for free. For example, you might be awarded a 25% match for every dollar you put in. The catch is, you may not get access to the free stock until it has vested for a set period of time, such as one year. Whether it be a pension plan or stock options, maxing out your benefits is worth it since it’s free money.

The bottom line.

When it comes to saving money, you need to find what works for you. The tips above are a good start, but you could also consider shopping around, buying used, or starting a side hustle to save more money. The key point is to think about what your goals are for the money that you’re saving. That could be buying a house or taking a vacation. You need this goal in place as it’ll motivate you on your journey.