Summer is the perfect time to start saving money—limited school costs and a steady income with a summer job means more money in your pocket. But instead of spending it right away, stop and think about your financial goals. Do you want to pay for all your textbooks out of pocket? How about taking out a smaller loan than you previously thought you needed? These things are all within your reach!
To start, make sure you are signed up for direct deposit. This way the money you earn goes right into your account and you are not tempted to get the cash. Once the money is in your account, put a percentage of it (experts recommend at least 20% of your monthly income) into a savings account. If you cannot afford 20%, start small and work your way up! There is a popular money rule of thumb that says a maximum of 50 percent of your monthly income should go towards necessities, 20 percent should go into savings and the remaining 30 percent can go towards discretionary items (these are all the additional items, such as going out to eat and renting a movie). It is the 50/20/30 rule and is very popular as a budgeting technique.
So now you have direct deposit, you are putting money away to save and you are budgeting, what next? Try cutting back on the additional expenses. Going out to lunch at a fast food restaurant costs about $6 (on the cheaper side), if you go out to lunch five days a week, that’s at least $30. Scale back by not going out to eat at all or only as a special treat, such as every payday. That extra money you are saving will add up fast! Instead of a spending lots of money on entertainment, save money with low-cost alternatives—make dinner, rent a movie, have a bonfire, go to free outdoor concerts and events.
There are so many different things you can do to save money this summer. Sign up for direct deposit, open a savings account (and use it!), start—and stick to—a budget, and cut down on the additional expenses in your life by finding easy ways to save money. Saving money does not mean you can’t still have fun; just find less expensive alternatives that will make you forget about the money you are not spending!