By Abby Chapman
Gianna Joyce, a senior finance major at the University of Georgia, has had a savings account opened for all of her college years.
With the savings she has accumulated, Joyce said she is finishing college feeling financially stable and thankful she made the choice to save early on.
“I think it helps with budgeting, gives a little bit of a cushion, and helps with navigating adulthood in terms of finances,” she said, adding that she opened her account “four years ago just with a traditional savings account.”
Every college student has a different financial situation. Some students can be facing thousands of dollars in student debt, while others may still rely on their parents for everyday spending money and tuition.
Regardless of what an individual student’s financial situation is, it is never a bad idea to have a savings account and to start contributing to it, said Sean Phillips, a senior vice president at Raymond James in Mobile, Alabama.
“Just starting a discipline of saving 10% of your paycheck before spending anything else (hopefully out of sight, out of mind) will put you light years ahead of most of your peers in the coming years,” Phillips said.
He said a 10% savings is a small enough short term goal that it should not feel too drastic for a college student potentially living paycheck to paycheck.
Phillips added when students are on a strict budget, it can be difficult to see the feasibility of allocating money into a savings account every month. While a short term sacrifice in extra spending money can appear to be hurtful at the moment, these sacrifices if repeated can add up to huge benefits in the future.
“Psychologically it creates a sense of security knowing that you always have that savings behind you and you won’t touch it, but if you had to, it’s there,” said Phillips.
An article published in September 2021 by U.S. News and World Report enumerated several benefits from opening a savings account. Savings accounts are low risk, earn a guaranteed return, do not require a large initial investment, and provide ongoing access to the money.
Some of the hesitation by college students for opening a savings account, may stem from uncertainty about knowing what type of savings account they should open or which banks to consider.
Business Insider created a list of “The best bank accounts for college students in 2022,” which students can consult as online resource. The list recommended Ally as a good savings tool for college students as it has no minimum deposit and no monthly fees.
Ally and companies like it may be a great tool for college students, as banking on an app or online is usually easily accessible.
Phillips said a simple interest account is the best for those starting out. “Once you have 6 months of living expenses saved, put additional (money) in some sort of investment account that allows your money to work for you,” he said.
Abby Chapman is a journalism student at the University of Georgia.