If you are a high school or college student, you may be tempted to blow your summer earnings on tasty meals out, trips to the amusement park, or a new wardrobe - but there are many good reasons that you should be paying yourself first before you spend your income.
Trust me, I get your temptation to take home that beaded mini or a new set of hubcaps! I did plenty of spending and little saving when I was in high school and college and, believe me, I had little to show for it in the end. After graduation, I was left with a big credit card bill and no safety pad. This was not an ideal way to start out life on my own.
Learn from my mistakes and remember these 5 top reasons to save every time you get paid and each time you are thinking about pulling out your wallet.
1. Reason #1: You will graduate with less debt.
The average student graduates from college these days with over $29,000 in student debt, according to the Project on Student Debt. If you are going to school in Rhode Island, that figure is more like $31,000. You can easily be one of the students that brings that average down, but it takes some careful planning and serious will power. Just put a little aside each paycheck before you spend a dime.
2. Reason #2: You will thank yourself later.
Have you ever heard the saying, "live like a college student now so you don't have to later?" Not a lot of students really get excited about taking that advice, but you should! Would you rather be eating Ramen Noodles now or when you are done with school?
3. Reason #3: You're going to want get rid of that sweater next year anyway.
"But I neeeeeeed it!" There are lots of expensive (and even not-so-expensive) things that you like now and feel like you need that you could care less about in 6 months or a year. Plan your purchases very carefully, don't make impulse buys, and ask yourself, "will I really still want this in a year, a month, or even next week?!?!?" If the answer is no, or even worse, if you are going to have to pull out your credit card to pay for it, simply walk away. I repeat, walk. away.
4. Reason #4: Books are not cheap.
Yes, you can get used books. And yes, you can buy some online. But college text books are still not cheap. When I was in college (and that was more than ten years ago, to date myself a bit), I would regularly spend $500 or more a semester on books, reading packets and other college supplies. Remember that. If you save your summer earnings, it will still hurt to spend this much on books, but at least you won't have to swipe your credit card to pay for them!
5. Reason #5: Savings grow.
Unlike borrowing, where you pay interest back on your puchases (Yes, that $30 meal could cost you $70 after you get around to paying it back!) savings actually earn you cash. While the APY (Annual Percentage Yield) isn't super high these days on most standard savings account, it is still better than nothing. Look for an account with a good interest rate, or consider saving your cash in a certificate of deposit or mutual fund if you won't need it right away and you can find a good yield. Put a little aside each time you get paid and watch it grow!
For free helping decided on where to go to school - or how to pay for it - make a free appointment with the College Planning Center of Rhode Island.