These tips are part of the rules that I have devised for myself. I believe that saving up is very simple in its essence. It’s one of those things that does not even require you to do anything. You are simply not doing something - you are not spending your money. It does not get more simple than doing nothing…
Here are my tips for better saving up efforts during your studies. Tried and tested the hard way.
Do you want to find out more about how to improve your spending habits? Check out my tips on how you can use budgeting to your advantage.
1. Save at the beginning of the month, not at the end of it
It makes more sense to put some money aside straight when you receive your salary+SU, otherwise you might risk checking your bank account towards the end of the month and seeing how little you have left...
One of the mistakes I did was to tell myself “Okay, this month we will leave 500 kr. in the account for next month”.
But those 500 kr. were never there at the end of it, I simply spent it all.
So I started to do the opposite. I sent the money to my savings bank/account, the second I got it. Almost like a hot potato, just get it out of the checking account as soon as I can.
Pay yourself first and treat the money as if it had never been in the account in the first place.
2. Have a separate savings account or an account in another bank
Sometimes you need to put some constraint on yourself. You might have a strong dedication, but not a particularly strong will. In this case, make it difficult for yourself to access the money. Make a separate account for your savings if your bank allows it, but ideally make an account in a separate bank, only for your savings.
I always recommend my friends Revolut which is free to open and maintain. It’s a bank from Britain that leads the fintech wave and turns millions into its accessible banking solution. It comes with a handy features, such as instant payments between users, ability to open ‘saving pockets’ that we talked about before, but also to invest into stocks or cryptocurrency.
I started to use Revolut back when I needed to send my money off to an account that can make it hard for me to access them. Revolut was perfect for the job.
3. Save/Invest in stocks/gold or crypto
This tip is more for the market savvy who understands a little bit about assets. I do not recommend this to someone who does not yet know anything about it because you might burn yourself.
Here is my philosophy for saving in e.g. crypto. I am putting money into crypto on a consistent basis and due to the transaction costs, I am not likely to withdraw the money the second I need cash. It’s a constraint that I like for myself.
Furthermore, the value progressively rises over the years and that discourages me from withdrawing the money, as I would be sacrificing the future value it might have. And in the unlikely event that the whole market plummets (and never recovers), I might lose what? 40%? 50%?
Sure, that would be painful.
But guess what, if I did not save up in this asset, I’d likely spend the money on something stupid. And I would have nothing regardless.
If you add up the potential future value, together with the fact that you’d blow the money anyways, it does not sound like a risky investment after all.
And if anything happens and the market crashes, it will come back eventually. And your money will be saved in it - coming back to full value again.
4. Divide your savings into more pockets
This is the part we mentioned above. Make sure that you focus on your “emergency fund” first and then set up other goals. Having savings in more pockets, serves as having multiple piggy banks - you might break one every now and then, but the others will lay intact.
Having all your money in one account labeled ‘savings’ is a recipe for disaster. Problem lays in a thing called momentum.
You probably experience this your whole life without realizing it. Momentum is when you start going to the gym for 3 weeks straight and the fourth week seems really effortless. Or when you start reading 2 books every week and all of a sudden find yourself surrounded by 50 of them.
Or on the contrary, when you start skipping school and from two or three occasions, it’s suddenly the end of semester and you’re baffled from how hard it is to actually attend.
Or, spending. You start by eating out, then buying some clothes, maybe a beer with friends, computer game, new bedsheets, larger wardrobe.... You start spending more and more and more and it seems impossible to stop. You’re in a momentum of spending.
Problem with having all your money in one piggy bank, as I found out, is that eventually you will start withdrawing from it. And what’s worse, is that you can start a momentum of this activity. You will withdraw more and more, until the piggy is left completely starving.
One way to control myself in these times is to have the ‘Last Resort’ savings and the ‘Loans To Myself’ savings.
I always use the ‘Loans To Myself’ part to take some money when needed. But I know precisely how much I borrowed and how much should I return back to the savings pocket.
This will discharge the momentum as you can see exactly how much did you allow yourself to withdraw.
5. Set up “spare change” on Revolut
One reason I love Revolut is the ability to set up a ‘Spare Change’. This automatic process is simple, yet brilliant.
Whenever you make a transaction, Revolut will round it up and save up the spare change into your savings account.
The brilliance of this is that you never really notice that you are spending, yet you will save up between 5%-10%. Without any effort.
It’s also extremely easy to set up. It only takes a few clicks and you are saving, without even knowing it.
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