Ok so I wrote that headline to catch your attention.
Obviously you need a bit of money to save 😜. But really this post goes to all the people that say
‘You shouldn’t start saving in university because you’re not making much anyway’
Well I say: ‘That’s beside the point’. 💁
Because it’s not about how much you save, it’s about how early you get started. And getting started early will literally change your life. And here are a few reasons why:
1. The magic of compound interest
I’m going to copy the text from the #Adulting section of Financially Mint:
Ben and Jill are saving and investing money.
Ben starts at the age of 30. He invests £100 every month until the age of 60. Taking an average stock market return of 7%, he will have £116,945.26 on his 60th birthday. Not bad, Ben.
Jill decided to be smart and starts at the age of 20. She also invests £100 until reaching 60. BUT! At the age of 60, she accumulates a whooping £247,154.26.
That is nearly double what Ben has, simply because she started 10 years earlier.
And the funny thing is that if Ben started at 30 but invested £200 instead, he still wouldn’t have more money than Jill (quite a few thousand less).
And this is just £100/month. That’s the most important thing to keep in mind if you want to start saving in university; start small.
A good number to start with is 15% of your income, if that’s too much then simply reduce it to 10% or 5%. But trust me, that small percentage will be the key to less stressful future 🔑
Because you’re right. When you’re a student, you can’t save much, it’s not the amount that will be life changing, it’s the consistency. So that once you graduate and start earning money, you will already be in the habit of saving some amount of your income. More on this below ⬇️
2. The magic of habits
As mentioned before - saving in university means getting into the habit of saving consistently. Even if all you can do is £50/month, you’re still putting yourself in the mindset that those £50 are going towards your goals. And in three months you’ll have £150 that is purely yours, that you worked hard to keep. And if suddenly your phone breaks and you need a new screen, you will be extremely relieved to have that £150 stored away for emergencies 😉
And if you keep doing this consistently in university, once you graduate and earn a bit more of money, you will still have that habit of saving. And now 15% will be much more money than before 💪.
Another reason why getting into the habit now is important: lifestyle inflation.
People say ‘Oh but I’ll start saving when I earn more money’, then they earn more money, get nice and comfortable and therefore spend more. In order to not fall into the trap of lifestyle inflation, keep saving that 15% the minute your get your income, and you won’t have to worry about it at all 😉
3. Not so stressful emergencies
Remember that phone screen you cracked? That’s £90 right there. What if you had missed your train and needed to buy a new one immediately? That could have been £50. Or maybe the washing machine broke and you need to buy a new one between flat mates? Boom, £70.
Let’s be honest, emergencies are stressful as hell. If you’ve got mum and dad to back you up in case something goes wrong, then that helps a lot. But for those students who can’t do that, emergencies can cripple you with stress.
If you find that this is your case, then the money you save up every month should first go to an emergency fund. This means a separate bank account with a little bit of money for when things go a bit iffy. I would put one month’s rent or one month of expenses at least. And trust me, you will sleep so much better at night.
The other thing emergency funds can help you save for is a career search. In order to not grab the first job you find once you graduate and end up in something you dislike, how about taking your time and making sure you find something you like? Having 3 months of expenses saved up will allow you to do that.
However, this is a very personal thing, and not many of us can save 3 months of expenses that quickly. But keep it in mind if you are able to start early and have some kind of idea what you want to do after university 😉
4. Get to live a life
Saving means living.
#lame?
Nope, what I mean is that saving money means you get to experience extraordinary moments; future trips with friends, a career change abroad, a trip around the world or just a weekend with someone you love.
Just by saving £50/month, you get £150 in three months - that could be a weekend trip to Rome.
Saving also allows you to work on your larger goals - maybe you really want to take a gap year after university, maybe you want to work in South East Asia for a bit and need to pay for a ticket, or maybe you want to start investing as soon as possible so you can reach financial independence.
As you can see, saving is a real life changer. It was for me, and it can be for you. I no longer stress over emergencies, and I’m continuously growing my emergency fund for when I want to work abroad. Saving money means you can breathe, take a step back and really decide what you want to do with your life. Because saving is not about having money, it’s about having more options. And I think everyone wants this, whether in university, at work or doing something in between.
What would you do with an extra £500 saved up? 🤔
