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PFCollege: How To Make Saving A Habit

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Personal Finance for College Students Series SealWhy is the savings rate of most Americans negative? It’s because our culture of instant gratification and easy access to credit has changed the paradigm of buying from “save up money to buy” to a “borrow money to buy” mentality. You cannot leverage the future to pay for today and expect to come out ahead! So, the very first step in improving your finances is to make saving money a habit. Making saving money a habit is most important, and easiest, when you’re still in college because it establishes a new, arguably better, method of thinking about spending – saving up before you spend instead of charging it. It’s also easier during college because the things you’re saving for are likely lower in value (a car instead of a house) so you can reach your goals a little faster.

1. Write down your goals – Are you saving up $500 to make a down payment on a car? According to someone more distinguished than I (though I can’t remember his or her name), people who put their goals into words are more likely to achieve them. Seeing the goal is a reminder that you’re in a “save” mode and that you’re saving for something. Instead of “I’m not getting a soda with my lunch because I want to save a few bucks” it becomes “I’m not getting a soda with my lunch because I want to save a few bucks so I can put down a $500 down payment to buy a new Honda Civic that I can drive around!

2. Track your savings – Do what fundraisers do when they put up a poster with a thermometer or a bar on it showing progress, make your own “car down payment” bar and be sure to update it when you save the money up. Constantly remind yourself of your progress, how you’re a couple steps closer to getting that set of car keys for your car.

3. Tell other people – Tell your friends you’re trying to save money to buy a car and they can act as a support group (because you’ll be giving them rides!). Perhaps they’ve been looking to save a few dollars for something else and you could find inexpensive things to do besides go to the bar or clubs (consider going to the riviting game of Dungeons and Dragons going on right now somewhere in some dorm – guaranteed!).

Those are only three tips out of a gazillion, if anyone has any tips on how they try to get themselves to save please do share!

This article is part of a new series I’ve started called Personal Finance for College Students (hence, PF College).

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5 Responses to “PFCollege: How To Make Saving A Habit”

  1. Jersey Girl says:

    follow through with the goals you write down…that’s the part i have a problem with!

  2. eROCK says:

    The only reason my savings is negative is because it’s just not worth it. I have a private college loan that I’m paying, which amounts to $55K with a fixed 6.5% interest. At this rate, over the full-term of the loan (299 payments or 25 years) I’ll be paying another $55K in interest alone. Would you suggest paying the minimum and place money in a Roth IRA or some type of mutual fund (in addition to my 401k) because the interest on both would presumably be above 6.5%? It hurts deep when you see $55K in interest on a $55K loan!

  3. Justin says:

    Good thoughts! I put at least 9% of any paycheck into a ‘Do Not Touch’ account. The money adds up and I only use it for dire emergencies (heaven forbid) or investing. I only let myself take the $ out once a year from that account. It is sooo much easier to save with a goal in mind though.

    :-)

  4. King of Debt says:

    When I was saving for my Jeep, I would always remind myself that I was doing it for the Jeep. I would ask myself if I really needed a milkshake, or if I could jsut put that 4 bucks towards my Jeep. We are now doing the same with our debt. One day soon, after our debt is gone, we’ll say that about our savings in general.

  5. A Few of My Favorite Things How-To’s
    Not only did I enjoy participating in Problogger’s How-To group writing project, the final list of how-tos gave me several days worth of interesting reading when I found a little downtime. Here’s a few of my favs, in no particular order:


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