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Saving

Financial Wellness - Saving

Saving money as a university student is a smart financial habit that can benefit you both now and in the future. It can help you achieve financial goals, reduce debt, and build a solid foundation for long-term financial stability and success.

Financial Wellness Series

Understanding Inflation

Inflation is when prices for goods and services increase over time, which means that the purchasing power of money decreases. To illustrate the impact of inflation on money, lets assume you had £100 today and the yearly rate of inflation is consistent at 2% annually , the table will highlight how much the £100 today will be worth in times to come;

HW - Financial Bar Chart

The above illustration highlights the importance of saving money and eventually investing it in such a way that it provides you a cushion against the diminishing value of money you have. 

HW- Saving

Why Save?

Saving money and the motivation behind it is different for each individual. Although inflation as highlighted above is a very good reason, there are plenty of other reasons why you should consider saving.  Below are a few reasons;

1. Peace of Mind: Having savings provides a sense of security and peace of mind, knowing that you have a financial cushion to fall back on in case of emergencies or unexpected expenses. It can reduce stress and anxiety about money, allowing you to focus more on your studies and looking after your overall health and well-being. 

2. Financial Independence: Building savings as a university student can help you become more financially independent. Having money set aside gives you greater flexibility and autonomy in your financial decisions, allowing you to pursue opportunities such as studying abroad, taking unpaid internships, or starting your own business without relying on parental support or loans.

3. Reducing Debt: Saving money can help you avoid or minimize student loan debt. By saving and budgeting effectively, you may be able to cover some of your expenses without relying solely on loans, thereby reducing the amount of debt you graduate with and potentially saving money on interest payments in the long run.

4. Future Expenses: Saving money now can help you prepare for future expenses such as graduate school tuition, relocation costs for a job, or purchasing a car or home after graduation. By starting to save early, you can reduce financial stress and be better prepared for major expenses down the road.

5. Opportunities and Investments: Saving money opens up opportunities for future investments and financial growth. Whether it's investing in stocks, starting a retirement account, or pursuing entrepreneurial ventures, having savings can provide the capital needed to take advantage of opportunities and build wealth over time.

HW - Saving

How to Save?

1. Assess Your Finances and Expenses: Start by understanding your financial situation. Calculate your income from sources like part-time jobs, scholarships, grants, and allowances from parents. Keep track of your spending to ensure that you stay within your budget. Use budgeting apps or spreadsheets to monitor expenses and identify patterns or areas for improvement. Please refer to all the budgeting tools provided in Chapter 1 - Budgeting

2. Take Advantage of Student Discounts: Many retailers, restaurants, and entertainment venues offer discounts to students. Always ask if a student discount is available before making a purchase and make sure to carry your student ID with you. There are plenty of student discount apps and other platforms where you can save money which you can find by following this link. 

3. Avoid making impulse purchases: Before making an impulse purchase, consider what else you could do with that money. Is there a more important financial goal you could be saving for instead? Stay away from places or situations that trigger impulsive spending, such as malls, online shopping websites, or sales events, unless you have a specific purchase in mind. Bringing a friend along while shopping can provide accountability and an outside perspective. They can help you stick to your budget and avoid impulsive purchases. Instead of shopping for entertainment, find alternative activities that don't involve spending money, such as exercising, reading, spending time with friends, or pursuing a hobby.

4. Cooking Meals at Home: Eating out can be costly, so try cooking meals at home instead. Plan your meals, shop for groceries in bulk, and prepare homemade lunches to take with you to university. Not only is this more budget-friendly, but it's also often healthier. Try Supercook and it will suggest you recipes based on the ingredients you have. 

5. Maximise Free or Low-Cost Entertainment: Take advantage of free or low-cost entertainment options such as student events, campus activities, museums, parks, and libraries. Look for discounted tickets to movies, concerts, or sporting events. Speak to your Student Union on the 3rd floor at Marsh Wall Campus and check out all the activities they have planned and how you can be a part. 

6. Create an Emergency Fund: An emergency fund can be for a specific purpose or for anything and everything life can throw at you as a surprise. Not too long ago we the world went through the Coronavirus crisis, which can be used as a great example of how an emergency fund can be vital. The aim should be to save at least three months of living expenses, so if for any reason your income stops, you can rely on these funds for crucial support. 

Savings Calculator

Have a goal in mind and you wish to start saving but not sure how much you need to put aside each month?

 

Tools to Enhance Your Savings 

Saving money during university is like laying a foundation for a brighter financial future. It gives you the tools you need to handle life's ups and downs, grab exciting opportunities, and feel more secure down the road. When you start saving early, it's like building a sturdy financial house for yourself. You'll be better prepared to handle unexpected costs, keep your debt in check, chase your dreams, and pave the way for a happy and prosperous tomorrow.

Opening a savings account at a bank or credit union is one of the simplest ways to save money. Depositing money into a savings account allows it to earn interest over time, helping it grow.

High-yield savings accounts typically offer higher interest rates compared to traditional savings accounts. While these accounts may require a higher minimum balance or have restrictions, they can help maximise savings growth. Contact your bank customer support and explore the options you have. 

Online savings accounts often offer competitive interest rates and lower fees compared to brick-and-mortar banks. They can be a convenient option for students who prefer managing their finances online. Some of the options are Monzo , Starling Bank and Revolut.

 

Round-up apps help users save money by rounding up their purchases to the nearest pound and depositing the spare change into a savings account or investment portfolio. Some popular round-up apps in the UK include Moneybox, Chip and Plum. 

 

You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. You must be 18 or over but under 40 to open a Lifetime ISA. You can put in up to £4,000 each year, until you’re 50. You must make your first payment into your ISA before you’re 40.The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. To read more on lifetime ISA, please click here to understand the pros and cons of the account. 

If you need any assistance with savings or financial guidance in general, please contact the health and wellbeing team either by emailing wellbeingteamlondon@sunderland.ac.uk or creating a ticket on Compass. 

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