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Learning how to save money as a teen or college student is a worth while endeavor. You see, saving money is a skill, much like riding a bicycle. Anyone can be taught to save money. Knowing how to save money as a teen or college student will build a life long foundation for successful money habits.
13 Ways a Teen or College Student Can Save Money
#1 – Understand the power of compound interest.
This is perhaps the single most important money tip you will ever learn. Compound interest is where money you have in a bank account earns interest in year 1. Then in year 2 your initial savings plus interest earns interest.
For example: let’s say you put $1,000 into a bank account that earns 2% interest. At the end of year 1 you will have $1,020. At the end of year 5 you will have $1,104.08. If your interest didn’t earn interest, you’d have $1,100 at the end of year 5 instead.
An additional $4.08 may not seem like a lot. However, as your savings grows and the number of years invested increase, the amount of interest you earn on top of interest grows exponentially.
#2 – Open a savings account.
Don’t just go to the bank your parents go to. Shop around to see which bank in your area or online offers the highest interest rates on savings accounts.
The majority of banks offer a very low interest rate on saving accounts but there’s a few hidden gems out there that offer a higher rate than average. See, when you’re saving money you want to maximize your return on investment or interest rate, in this case.
#3 – Try making it difficult to access your bank account.
If you won’t be making regular deposits into your savings account, then hide your ATM card and online login information. Alternatively, give that stuff to your parents to hold for safe keeping.
Depending on your personality, this may or may not be necessary. For those who aren’t good with their money yet this is probably a good idea for now.
#4 – Follow a budget, especially if you have a steady income from a job or from doing regular chores.
While creating a budget might be easier if you have steady income it’s probably even more important if you don’t have a steady stream of cash coming in. This is because your money will likely need to stretch further.
Creating a budget can be as simple or as complex as you’d like it. The simplest version will track income and spending overall.
A more complex budget will track your spending by category. Tracking your spending by category will allow you to see in greater detail where your money is going.
Ideally, this method will show you areas where you spend more than you probably should. Thus, helping you trim your spending.
#5 – Always save a portion of money you earn or are given as a gift.
Set the percentage ahead of time and stick to it. This way you won’t be tempted to spend money on something you don’t need.
Ultimately, you want to remove temptation where you can. If you have a job see if your company can transfer a set amount of your pay or a percentage of your paycheck to your savings account.
#6 – Wait a week before buying the latest item you desire.
Remember, if you don’t own it today you probably won’t need it for the next week. During this week, think about how long it took you to save the amount of money you’re about to spend.
Does the cost of the item reflect the effort it took you to save for it? If after a week, you can justify the cost of the item then go ahead and buy it.
#7 – Use coupons and cashback rebate apps when shopping.
The less money you spend the more money you can save. Coupons can be hard to keep track of though. So, may I suggest leaving an envelope of coupons for your favorite stores right next to your house keys.
This way they are right in front of you any time you go to leave the house and you can grab any you might need on your way out the door.
Even better than coupons though are cashback rebate apps you can save to your phone. The two best overall cashback rebate apps are Rakuten and Ibotta. Rakuten can also be used on your computer when purchasing items online. The one caveat is that you will need a debit card to benefit from these cashback rebate apps.
#8 – Take advantage of student discounts.
Lots of movie theaters offer discounts to students on certain days and/or times of the week. If your local movie theater doesn’t, they likely have discounted matinees times you can check out.
Also, several big name brands such as Apple, Sprint, J.Crew and Subway (just to name a few) all offer student discounts. If you’re unsure if a store offers a student discount just ask. The worse they can say is no.
#9 – Focus on doing cheap or free things when spending time with friends.
You could organize a football or baseball game at the local park with all your friends. Or you could opt for a night in with your friends and play video or board games all night. The idea is to be creative and start looking for ways to have fun on the cheap.
#10 – Find a job or side hustle.
The best way to save money is to make money. If you aren’t old enough or aren’t allowed to get an official job, there are plenty of unofficial jobs you can do.
Unofficial jobs range from babysitting, mowing the yard, shoveling the snow to starting your own YouTube channel. These unofficial jobs aren’t limited to your home either. Ask you neighbors or grandparents if they need help around the home that they’re willing to pay you for.
Also, when done right, something like creating your own YouTube channel can create passive income for years to come. Passive income is money that you earn even when you aren’t actively working to earn it. If you ask me, there is no better kind of income.
#11 – Avoid debt.
This is huge! As soon as you owe money, you will likely start having to pay interest on the amount you owe. So, you want to avoid this like the plaque.
Credit cards are probably the easiest way for teens and college students to go into debt. If you haven’t mastered money management yet, then stay away from credit cards.
Credit cards should only be used to benefit from a rewards program offered by the credit card company and should be paid off in full each month.
#12 – Set a goal.
Saving money is easier when there’s an end goal in mind. You could be saving for the latest game console or for your first car.
There is a big difference between how much you will need to save for these 2 things. However, the focus and drive to obtain these can be equally strong if you establish what they are when you start saving.
Without a goal in mind, you will likely not be as steadfast with your savings. This is critical as the earlier you learn how to save money, the better you will be with managing your money later.
#13 – Ask a family member if they’ll match the amount or a percentage of the amount you are saving each week or month.
This is particularly useful for larger goals such as buying a car. Before asking someone to match your savings, make sure you know what your goal is, and that the person will support it.
If you know your grandparents hate when you play video games, then don’t ask them to match your savings so you can buy the latest video console. You’ll likely be denied. Instead, align your savings goal with a like minded relative.
Hopefully, you have a pretty good idea how to save money as a teen or college student now. Remember, saving money today is all about creating good money habits that will last you for years to come. Your future self will thank you!