Smart Money Moves: A Guide to Saving in College
Higher education can be a significant financial investment. Balancing tuition, books, accommodation, and social life can be challenging, leaving many students wondering how to save money while in college. However, with careful planning and smart choices, it is possible to prioritize savings and build a strong financial foundation for the future.
Laying the Groundwork for Financial Success
College is a pivotal time to develop sound financial habits. The earlier you start your financial wellness journey, the better equipped you will be to manage your money effectively throughout your life. College provides an opportunity to learn how to manage your money and build spending habits that will set the stage for financial success.
Understanding Your Financial Landscape
Before developing good financial habits, assess your basic income and expenses. Are your parents or guardians providing financial support? What are your essential living expenses? Many college students work part-time jobs alongside their studies. According to the National Center for Education Statistics, in 2020, 74% of part-time undergraduate students and 40% of full-time students were employed.
Creating a Budget That Works
Budgeting might seem daunting when you have limited funds. However, establishing a budget early on will make it a habit later when you have more money to allocate toward financial goals. Allocate a specific dollar amount to each expense category and strive to stay within those limits.
Maximizing Income and Minimizing Expenses
Finding Part-Time Employment
Working part-time as a research assistant, tutor, delivery driver, or in another paid role while in college offers benefits beyond just increasing your bank balance. You may qualify for the Federal Work-Study Program, which can help you find a job on campus. Alternatively, you could seek employment at a local café, restaurant, or retailer. On-campus jobs often offer the best fit because they’re designed with student schedules in mind. Tutoring, working as a learning assistant, staffing the recreation center or library, or giving campus tours are all solid options that allow you to earn while you learn.
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Leveraging Student Discounts
Your student ID is a powerful tool for unlocking savings. Flashing it at stores, mass transit providers, museums, and even restaurants could get you discounts. Your college might have a list of local and national businesses that offer special pricing to students.
Cutting Textbook Costs
Textbooks can be a significant financial burden each semester. Consider buying previous editions of textbooks. Purchasing a new physics book, such as "Conceptual Physics," by Paul Hewitt, may cost upwards of $259. However, on a second-hand book site, such as ThriftBooks, you may find a copy for $8.59. You may also want to try renting your textbook from a company like Pearson. Here, you can rent the same book for $9.99 per month. E-textbooks are usually cheaper and don’t take up space in your already-cramped dorm. Start looking for textbooks as soon as you get your syllabi.
Utilizing Campus Resources
Ensure you are getting the most out of your activities fee by using campus resources when you can. This could mean going to the school gym and health centers, which may be available for free or at a reduced price. Many campuses also have a fitness area, gym, movie nights, free trips, and hold big events all at free charge.
Strategizing Meal Plans and Food Costs
Meal prepping isn't just a millennial trend-it's also a smart move for college students, especially those who live off campus or have a limited meal plan. Strategize your meals to use ingredients efficiently each week. A meal plan offered by a college is usually the easiest and cheapest option. If you're living off campus, buy groceries and cook your own meals. Takeout and delivery can really add up. Learning to cook isn’t just about saving money (though you’ll save hundreds). It’s about having control over what you eat and not panicking when your meal plan runs low. Start simple with one-pot pasta dishes, stir-fries, and basic breakfast foods. Buy ingredients that work for multiple meals. That bag of rice can be fried rice one night, a side dish the next, and rice bowls later in the week.
Exploring Economical Housing Options
Outside of tuition, housing is often college students' biggest expense. Research costs both on campus and in surrounding neighborhoods to determine the best living option for you. You may be able to nab free housing and maybe even a food or living stipend by working as a resident assistant (RA). You can cut your dormitory costs if you choose a basic shared room instead of a private room or a deluxe apartment-style unit. If your school is close enough and circumstances allow, living with your family can save on housing costs. For some, living in a dorm is typically cheaper than living in an off-campus apartment. For others, living in an apartment with several people is cheaper than living in a dorm because the cost of housing is divided. To save money, compare the cost of living in a dorm versus the cost of living in an apartment, either alone or with several other people.
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Seeking Financial Aid and Scholarships
Complete the Free Application for Federal Student Aid (FAFSA) to determine your eligibility for need-based scholarships, grants, and federal student loans. If you're already receiving need-based aid, you'll likely need to fill out these forms every year to remain eligible. Scholarships and grants (funding that doesn't need to be repaid) aren't just for incoming first-year students. Your school and even private scholarship-granting organizations often reserve some of their cash for returning students. These may be need- or merit-based and may require an application, essays, and letters of recommendation. Start researching aid possibilities as soon as possible. The competition for aid increases when the economy is weak. Don't rule out any school as being too expensive. Many colleges-especially the private ones-have increased their aid budgets to attract applicants whose families are now more price-resistant given the state of the economy.
Minimizing Loan Interest
Though you don't have to make student loan payments while in school, interest generally starts to accrue on unsubsidized federal loans and all private loans during that time. If you're able, you can start chipping away at that interest.
Avoiding Unnecessary Expenses
Be mindful of small, recurring expenses and fees that can add up over time. Review your bills for expenses such as streaming services or subscriptions. Do you really need them? Are they bringing value to your life? If not, cancel them. Another option is to split the subscription with a roommate(s). When it comes to cell phone bills and streaming platforms, check whether you can lower your bill with any new promotions. Simply calling customer service and asking if you're receiving the lowest rate possible can cut a few dollars off your total.
Exploring Alternative Entertainment Options
Movie tickets can be expensive, but using a friend's streaming services is usually free. Look for alternative entertainment options like gathering at a friend's dorm room instead of in the local cafe or keeping up with your favorite celebrities online instead of buying that glossy magazine at the check-out stand.
Making Your Money Work for You
Utilizing Different Types of Accounts
Saving money in college is a good goal on its own. But you could potentially level up and make sure your money is working hard for you too by depositing it in certain types of accounts.
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- Checking account: Checking accounts are meant for everyday spending and generally do not offer much, if any, interest on the money held in them.
- Savings account: A savings account typically earns more interest than a checking account, but may be slightly less accessible. They typically don't come with debit cards or offer check-writing capabilities, and depending on where you hold your savings, you may be limited in how many withdrawals you can make per month. Look into a student high yield savings account so that you can earn interest on your deposits. Also, many banks offer incentives, such as cash, upon opening an account that will help you get closer to your financial goals, whether that's buying a new car, moving into your own apartment, or building an emergency fund.
- Roth IRA: Even though "retirement account" is in the name, Roth IRAs can be valuable accounts for college students. Roth IRAs are best known for offering tax-free withdrawals in retirement (provided certain requirements are met), but they also offer the flexibility for you to make penalty-free withdrawals of any contributions you made (but not any investment earnings) before then. You can only contribute as much into it for the year as you earned, however. For example, the current Roth IRA contribution limit is $7,000 (this rises to $7,500 in 2026). If your campus job only paid you $1,000 (and that was all the earned income you had for the year), the max you could contribute to your Roth IRA is $1,000. If you had no earned income at all during the year, you can’t contribute anything.
- 529 account: You may be familiar with-or even already have-this tax-advantaged savings plan that allows you to set aside money for education. Funds in a 529 account grow tax-deferred and can be withdrawn tax-free for qualified education expenses. Plans may offer the ability to deduct contributions, depending on what state you live in and open an account in. This could be a good option for funding any future education expenses or repaying student loans. But make sure to consider your entire financial picture as you may be better off repaying loans now than contributing to a 529, depending on your loan's interest rate.
Automating Savings and Bill Payments
Adulting can be hard, and setting aside money or remembering to pay bills is even harder. Automating your savings and bills can make everything seem more manageable. For example, you can set up direct deposit with as little as $20 from your checking account to your savings account each month. You can also automate recurring bills like credit cards to at least pay the minimum each month.
Building Credit Wisely
Your credit score will factor into everything, from renting an apartment to buying a car to purchasing your first home. If you have student loans, consider making small payments of $25-$50 per month (or twice a month) while you're still in school to pay down interest and have some positive repayment history on record. The two best ways to grow your credit are to make payments on time and to borrow only what you need.
Strategic Planning for Long-Term Financial Health
Planning for Loan Repayment
According to the Washington Post, one in every five Americans currently has student debt. Once you finish school and the grace period is up, you'll have to start making student loan payments. It may seem jarring to go from paying nothing to paying several hundred dollars a month. If you look at your total projected debt, repayment plans, and interest, you can create a long-term debt payoff plan that puts you in a good place after you graduate. Be sure to also look into refinancing your loan, making payments while you're still in school, signing up for autopay for a discount, or even looking for a company for your first job that pays off some of your debt upon signing an employment agreement.
Educating Yourself on Retirement Savings
When you start your first job, your employer may offer an employer-sponsored retirement plan, like a 401(k). The most important thing to remember when thinking about a retirement savings plan is the sooner you get started the better. While saving for retirement while still a college student may be tough, it's a great idea to start educating yourself on your hopes and dreams surrounding retirement and how much of your paycheck you want to dedicate toward it, upon landing your first job. You might want to read up on the F.I.R.E. movement, which stands for "Financial Independence, Retire Early." Those who take up this lifestyle often save aggressively, with the goal to retire early, say by 50, or in extreme cases, 40.
Embracing Resourcefulness and Opportunity
Exploring Side Hustles
Not every side hustle has to take hours out of your week. Many universities regularly run paid research studies that are quick, flexible, and surprisingly well-compensated. These opportunities usually fit neatly between classes and require little more than showing up and participating. You can add another roommate, or find ways to save on meals or groceries? Maybe you take amazing photos, and your friends keep telling you you'd be great as a social media influencer. Why wait for graduation when you can make money and learn a skill for your resume now? If you live off-campus, you might live amongst families looking for a sitter. You can always go out one weekend night and reserve the other for sitting. Bonus points if they feed you dinner and you can save on a meal!
Taking Advantage of Freebies and Perks
Free food and SWAG are a staple of campus life. Stay ahead by bookmarking your school’s events calendar and following student organizations on social media. Beyond events, don’t forget about the built-in perks your tuition is already covering.
Avoiding Costly Mistakes
Avoid Changing Majors. Changing even once can add a year or more of college. Explore your interests, values and skills and match them to potential careers before you start college. Don’t put tuition on a credit card. This debt is more expensive than ever, given the recent changes to interest rates and other fees that many card issuers are now charging.
Considering Summer Courses
Taking one summer course each year in addition to a regular full-time schedule can help you graduate a semester early.
Claiming Tax Benefits
Take advantage of the Student Loan Interest Deduction, the American Opportunity Tax Credit, the Lifetime Learning Tax Credit and the Tuition and Fees Deduction.
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