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Below are 3 tips to help you start building up your savings as student:
1. Make It Automatic
If you have a part-time job while in school, dedicate a small percentage, like 10%, of each pay cheque to savings. Set up an automatic transfer (also known as a Pre-Authorized Contribution) from your chequing account to your savings account to coincide with each payday, so you never have to think about it. You can use this money for next year’s tuition, a summer trip abroad, or keep it saved for a rainy day!
2. Save Your Student Loans and Scholarships
One of the reasons students graduate with so much debt is often they receive more student aid than they actually need –and they spend the difference. If you received more student funding than you need to pay your tuition this year, set aside the amount you don’t need in a savings account (see tip #3) for next year, or get ahead on your debt repayment at graduation.
3. Choose a High-interest Savings Account or GIC
You work hard for your money, so it should work hard for you. Don’t leave your savings in a chequing account earning little to no interest! Instead, use a dedicated savings account or a Guaranteed Investment Certificate (GIC) to earn higher interest on the money you save.
Even $50 per month in a savings account can grow to over $2,400* by the time you graduate from a four-year degree. Developing good savings habits at an early age will ensure they stay with you after graduation!
*$600 per year in savings for 4 years assuming a 1% interest rate
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.