How can I save and budget money while maintaining a love life in college?

Students often have had very little experience with budgeting by the time their first semester in college rolls around. It is most likely their first extended stay away from home, and they have the newly found responsibility of making their own financial decisions. College students may also start exploring new relationships and a potential love life once they reach campus. But how can students stick to a budget, save money, and maintain a love life all at once?

It may seem overwhelming at first but there are a few tips and guidelines that make the process much more manageable.

  • Consider free on-campus activities. The Illini Union Board hosts events such as movies on the quad, comedy shows, and trivia night. These free activities are perfect for a casual date or with a group of friends.
  • Keep it homemade. Most people would agree that making homemade meals for a significant other is a kind gesture. You can make them their favorite dish or entrée that they mentioned one time. It shows you listen, care, and will cost much less than a night out on the town.
  • Use daily deal coupons. Websites like Groupon and LivingSocial provide activity-based coupons. These coupons often come in the form of activities like cooking classes, zip lining, sporting events, and much more. These activities provide a relatively inexpensive way to venture out and try new activities in the surrounding area.
  • Try a new restaurant. Despite popular belief, it is possible to spend money and maintain a budget. However, it is important to keep the spending within reason and to limit the frequency of the spending. Want to try that new Thai place on campus with your study partner from biology class? Go for it! It’ll be a fun experience but make sure it doesn’t become a habit. The next date could potentially be one of the three previously mentioned activities. See what I’m getting at here?

The aforementioned tips provide ways to maintain a love life while sticking to a budget. It may be beneficial to allocate a certain percentage of income or spending money towards miscellaneous expenses (your love life expenses may fall under this umbrella). This way you will know how much you can and are willing to spend each month. In addition to budgeting for your love life, make sure to continue to budget for food, books, rent, and anything else that you will need on a monthly basis.

Written by Alex Hoffmann, Financial Wellness Peer Educator, University of Illinois Extension

Online Expense Tracking

There are so many ways to track your expenses: traditional pen & paper, mobile apps, computer programs, envelopes, online apps, and many more. No matter which method you choose, tracking your expenses is key to maintaining your spending plan. How do you know if you’re sticking to your budget if you don’t know how much you’re spending? It’s also a great activity as you’re developing a spending plan, because it allows you to see what you actually spend on items and inform how you may need to re-prioritize your budget. You might be surprised where your money is going.

Tracking your expenses online is not only convenient but it’s less time consuming than more traditional methods. Thankfully, there are several different websites that offer free, high-quality expense tracking systems. LearnVest, Mint, and GoodBudget are three expense-tracking platforms that offer mobile applications as well. These websites make it easy for you to track what you spend, because they sync to your bank accounts, allowing you to see all of your expenses in one place. LearnVest offers step-by-step guidance and, for an extra fee, the option to work with a financial planner on creating a spending plan that can help you meet your financial goals. GoodBudget takes the traditional envelope budget system and transforms it into a virtual system – very helpful for those that do not wish to sync their accounts to an online system. Mint, a fan favorite, allows you to customize your budget and presents your data in an aesthetically pleasing way!

When choosing an online expense-tracking tool, consider these 3 things:

  • Security – Make sure that the tool you use, whether paid or free, uses bank-level security to protect your financial data. Install any updates ASAP to reduce security issues.
  • Usability – If you do not find the tool useful or don’t check it often, it’s not going to be helpful. Choose a tool that you feel comfortable navigating and will be motivated to use.
  • Lifestyle – Your budget, as well as the tools you use, revolves around your lifestyle. For example, if you have limited access to the internet, using internet apps might not work for you.

No matter which method you choose, it’s important to select a method that works for you and your lifestyle. For more information on expense tracking, check out this great resource from GetRichSlowly.

Written by Alex Ziskind and Andrea Pellegrini, University of Illinois USFSCO Student Money Management Center

Expect the Unexpected – Saving for Emergencies

Planning for the unexpected can ensure that you are able to weather a financial hardship should you lose your job, have a car repair, or any other unplanned expense. By having savings set aside for emergencies, you decrease the need to rely on credit cards or loans to cover emergency situations. Borrowing funds to cover emergencies can create additional financial hardship. Most experts recommend that you have between three and six months of income set aside in emergency funds, but having any money set aside can help when a financial storm arises.

A recent survey has found that “18- to 30-year-olds are the most likely to have up to five months’ expenses saved up since they might have the benefit of lower expenses due to having roommates, living with their parents or being students.” Your college years can be an ideal time to create and build your emergency savings.

If you’re not sure how to start saving for an emergency, here’s a crash course in what to look for:

  • Prioritize your spendingneeds come before wants. If going without something could cause you physical pain or injury (like water, shelter, food, medications or proper clothing), then it’s probably a need. If you could get by without it, it’s likely a want.
  • Analyze areas of opportunityidentify ways you can save. If you cut out a $4 beverage or snack just once a week, you could save over $200 a year.
  • Save extra moneyturn birthday money into a rainy day fund. If you don’t have regular income, putting away gift money or profit you make off selling unused items can help start your emergency fund.

Getting Through Tough Financial Times is a resource developed by University of Illinois Extension to help individuals and families weather financial storms. This site provides information on spending habits, managing finances, and smart savings strategies.

Written by Sheri Williamson and Andrea Pellegrini, University of Illinois USFSCO Student Money Management Center

How and where do I start saving money?

The best time to start saving money is now. When you look at the bills you have to pay each month, it may not seem like there is much extra to put away for down the road. But saving for your future is an extremely wise financial choice, and even starting small with saving can take you far—farther than you might think. If you approach savings with a plan and with an understanding of your options and decisions, you’ll likely find the process less intimidating than expected, and you’ll be glad you started sooner rather than later.

A savings goal—or a specific amount of money to have saved by a certain period of time—can help you determine and be disciplined in setting aside money on a daily, weekly, or monthly basis in order to achieve your target. When thinking about savings goals, it can help to think about where you need your money to go and where you want your money to go. Are you hoping to purchase a car soon? Do you have an emergency fund set up? When thinking about your goals, be sure to ask yourself if they are long-term or short-term—will you need that car in the next month, or can you wait a few years?

Savings can be set aside in a variety of ways. For example, if you’re saving for retirement, your employer will likely automatically deduct a certain amount of money from your paycheck to be put into your retirement fund. See the Investing questions on the Cultivating Currency site for more information on that topic. But what if you’re saving money for a computer or down payment on a house? Where should you put your money? Or what if you’re creating an emergency fund?

An emergency fund is an important part of saving. When a crisis (like a natural disaster or job loss) or unexpected event (you need new glasses or a car repair) comes up, you will want to be prepared. It’s wise to designate savings for an emergency fund as part of your spending plan, and good general goal is to have three or more months of living expenses available in an emergency fund.

After you have an idea of why you are saving money and what you are saving money for, you need to actually save that money—where do you keep it? If you want your money to be somewhat easily accessible, a savings account is a safe and viable option. Savings accounts are money deposited in a bank or credit union. When looking for a bank, look for an institution that is insured by the Federal Deposit Insurance Corporation (FDIC). Credit unions are member-owned cooperative organizations; look for credit unions that are insured by the National Credit Union Administration (NCUA). Like banks, credit unions have somewhat low interest rates, meaning your money doesn’t earn as much as time passes. Because these types of accounts are convenient to access and earn lower rates of interest than other less accessible options, think about using savings accounts for your short-term savings goals. At your bank or credit union, ask about different accounts—the interest rates, fees, pros, and cons associated with each type of account.

When making your savings goals, it is helpful to have at least a general idea of how much a particular item or event costs. You may have an idea of how much tuition will be or how much money you need to save before you can buy a computer. If you’re saving for a vacation, you may not know the exact costs, but you should certainly have an estimate. Many calculators exist to help you determine how much you need to save in order to meet your goal. Knowing where you plan on saving your money will give you a more specific estimate of how much you need to save over a certain period of time, as interest rates differ depending on the financial institution. Using a calculator or spreadsheet to calculate savings may also demonstrate how even a little savings each day can add up quickly.

What is the difference between saving and investing?

Both saving and investing have pros and cons, and the best choice depends on your reasons for saving money. Some questions to ask yourself before determining if you should save or invest are: Do I need to be able to easily access my money? Do I intend to save this money for a relatively short or long period of time? Am I willing to earn more money if it also means the possibility of losing more money?

Saving money in a bank is safe, easily accessible, but earns little interest. When compared to investing, there is less risk of losing money if it is kept in a savings account. Depending on which type of savings option you choose—CD, savings account, or money market, for example—you typically do not need a large sum of money to open an account. If you hope to take your money out of savings in a few months, or if you want it to be accessible in the case of an emergency, a savings account would give you that convenience and ease of access. However, if you plan on letting your money sit for an extended period of time, it won’t earn a lot in a savings account, as interest rates are low. Savings accounts also do not protect against inflation, or “purchasing power risk,” which becomes a greater threat the longer your money sits.

Investing can be riskier, but it can also lead to greater reward, and it is usually better option for long-term savings goals (for example, three years or longer). There are several options for investing, including stocks, bonds, and mutual funds. Investments can increase or decrease in value quite rapidly, so the risk involved depends on your type of investment, where you invested your money, when you sell your investment, and other factors, including the fact that your money is not federally insured. However, your potential to earn more money is greater, especially over an extended period of time. One way to help avoid risk is to diversify, or invest in a variety of places (in other words, don’t put all your eggs in one basket). Because of the risk involved as well as the long-term, less accessible nature of investments, investing is a good decision for those who are financially stable and have money secured elsewhere, such as in an emergency fund and/or savings account.