Before you determine what amount of money you want to save each month, you first have to pay your debts. College student debts typically include a cell phone bill, car payment and insurance and of course a credit card bill. Any remaining cash is left for spending, having and fun and… you guessed it, saving. These items are best managed with your budget.

How much should I save?

It depends. I know, I hate hearing that for an answer too… but it wouldn’t be a bad idea if you tried to save at least 15% of your monthly income. Basically, for every $100 dollars, try to put away $15 dollars. You’d be surprised at how much this adds up over the course of a few months.

Depending on each person’s individual situation, you may be able to save more or less. One recommendation we have is to set aside living expenses, or “emergency cash”. You never know what may come up, and having that cash to fall back on is a safe-haven.

How often should I save?

Every chance you get! A portion of every paycheck should go to savings. Sometimes, bad timing prevents us from saving what we’d like, such as receiving three bills in the mail within a week of each other. Play catch up if you can. Remember, you deserve it. Why wouldn’t you want to pay yourself?

How do I save?

There are a number of ways that you can save your money. A good way to start is to save up some cash on hand, and take it to the bank one day. Some employers who provide the direct deposit service offer the option of allowing you to designate which bank account your paycheck goes into. An advantage to this is that you never really see the money you saved. It’s tough to get a paycheck of $200 and put away some of that money when you can easily go to the mall and spend it. But if you designate that $50 goes to savings right away, you really only have access to $150. Remember, there’s a lot of psychology at play when it comes to handling your finances.

Where can I save?

If you’re like most people, you probably enjoy spending money. Saturday afternoons at the mall, checking out summer blockbusters and going out to dinner is just fun. One downside to having a checking account and a savings account at the same bank is that it’s very, very easy to tap into your savings. You pull up to the ATM and realize you need a little more cash… ah, what the heck. Do a quick transfer and next thing you know you’re spending your savings on a night out with your friends. We’ve all done it, I’m sure. The best way around this, we’ve found, is thru online savings accounts. You usually won’t get checks or a debit card, so it’s tough to spend your money. You’d have to do a transfer and probably wait a few business days to actually get your cash to an accessible bank account. It’s money saved that you won’t come by to easily. Plus, the interest rates are so much higher than the bank you use (guaranteed).

Interest rates rise when accessibility falls. If you can’t access your cash as fast as you would like, you are less inclined to try to access that money. Since you can’t use that money for leisure activities, and the bank is using it for loans, the bank is willing to pay a higher interest rate.

There are ways to receive a higher return on your savings, such as investing. Next in the budget series, we’ll move on to other savings and retirement tools and how to make the most of your money. Literally.

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