The Importance of Saving Money in College
By: Claire Smith
Saving money is important for college students because it helps them graduate without a huge financial burden. It is impossible to think about college and not think about how expensive it is and how millions of students are unable to pay off their loans and end up buried in debt. The thought of going to college to get an education but graduating with thousands of dollars in debt scares people, because being in debt can control one’s life. Students fresh out of college are desperately seeking new jobs in order to attempt to pay off the debt that started in college.
Some people think the goal in life is to get a good-paying job, start a family, and live the American Dream. However, how can people experience the American Dream when they are buried in student debt from college? Everyone has their own definition of the American Dream. Some people define it as a happy way of living and the aspirational belief in America that everyone is entitled to the opportunity for success. However, it is hard to achieve the dream and be successful when there is a heavy load of student debt depriving one of success. For some people, college was where it all started by taking out student loans. According to Marketplace, “Today, roughly seventy percent of American students end up taking out loans to go to college. The average graduate leaves school with around $30,000 in debt and all told, some 45 trillion Americans owe $1.6 trillion in student loans.”
Eroica Nguyen, the Senior Associate Director in the Financial Aid Office at Marymount, said, “The higher your debt the less options you have in life choices because you are tied to your debt. For example, you might have to turn down certain jobs that you would have liked to take but can’t because you aren’t going to make enough to cover your loans or debt. You might not be able to take a part-time job when you have a family because your loan is too big or maybe you can’t afford a car because you spent too much money in college and have to take the bus instead.”
Students are inexperienced with money and tend to borrow more money than they need. It is too easy for students to take loans and many of the young borrowers do not understand the financial repercussions of the effect of loans and paying them in full and on time. The best advice about loans Nguyen gave was that: “Loans give a way for almost everybody in the United States to go to college, but it’s not the same path for everyone. I think a lot of people in the media today say that everyone should go to college, but it’s not always the same path for all but you do get to the same goal which is the point. Knowing what your goal is and getting there the smartest way.” Since students do not usually understand the loan process, they are already digging a hole in debt. This is why is it important for young adults to save money during their four years of college.
College Students find it challenging when it comes to managing money. As young adults, they are forced to figure out how to budget money, pay for expenses, manage their time, all while getting a good education. With all these demands, it is not surprising that debt is among the biggest problems for most students. Certain money missteps can be the start of being financially unstable for years, which is why they need to be careful and make sure that finances are in order, because that will help to get a good start after school.
Some of the biggest mistakes college students make with their money is racking up credit card debt. Credit cards are the most convenient way to buy things, however, people do not fully understand how dangerous they can be if they are not careful. Credit card companies like to lure people with their high-interest rates so that people tend to spend more money than they have. Nguyen shared her experience as a college student when she got her first credit card confessing, “My biggest mistake at that age in college was getting a credit card and just spending it on clothes or food or just silly stuff that I didn’t really need. But I learned my lesson because I had to pay back the credit card company, which took a while.” While college students are trying to figure how to manage their time wisely and keep up with their studies, they also must make sure that they do not miss a single payment if they do have a credit card. Missing one payment can remain on their credit history and can damage their credit score. This is one of the fastest ways students find themselves in debt.
The four years of college are one of the best times to get into a budgeting habit. Unfortunately, students do not realize this critical stage in life and they do not know how to manage a budget. Some think failing to make a budget is the worst money mistake a college student can make. A budget is a financial plan that saves money for the things that people actually need and will keep you free of debt. Many college students make the poor decision of paying too much for food. Marymount University offers a meal plan, therefore, it is unnecessary to buy food or eat out at restaurants since money was already spent on the meal plan. Saving money is not hard, but it does take discipline and it will benefit students for the rest of their lives if they learn how to save money during these critical years.
When asked their thoughts on why college students should save money, Marymount students had similar answers. Abby Fisher, who is a senior biology major, thought saving money while in college is super crucial. She said, “Having a job working as a server, I always try to save tips that I received and saved it in case my car broke down or for some emergency. I used to not save money, but I started to my junior year, which is when I first got my job.” As an experienced senior, Fisher shared multiple reasons why every college student should save money. “When it comes to managing money, you have to keep in mind that if you want to go out with your friends, it usually costs money but you should make sure you can afford to have some fun.”
When asked if she thought education is worth the risk of getting into debt, Fisher agreed but acknowledged that she is already in debt. However, she was not concerned about falling into debt when choosing a college to attend. “Part of the reason why I chose Marymount was because of the scholarships it offered…ultimately, as an incoming freshman looking at colleges, worrying about getting into debt didn’t really cross my mind.” Since Fisher is almost done with college, she was asked if she could do college over again, would she do anything different with handling money? Fisher said, “I wouldn’t change anything, because, in my opinion, I thought I was saving money better than the average freshman. I thought I was doing a decent job managing my money.” The advice she gave was to not spend money all in one night and try to be smart about it when you go out with friends and create a budget as soon as possible.
Maggie Lilly, a freshman majoring in interior design, said, “Students should get a job in college so that they have some sort of income and should set aside part of their paycheck because it will help them to pay off their student loans.” When she was asked to share her personal experience of saving money while in college, she said, “I try to save money but I am a commuter student and I have to pay for things like gas or groceries. I try not to eat out but being a commuter it’s just convenient for me sometimes.” Even though some Marymount students have similar thoughts on the importance of saving money, will students actually become disciplined and smart with their money for the sake of their future?
There are several ways and tips students can use to save money but some are simply not aware of them. According to an article on OneMain Financial, filling out the Free Application for Federal Student Aid (FAFSA) form should be a priority for kids about to attend college. Each year both scholarships and billions in federal Pell Grant money for college go unclaimed. Nearly every school offers scholarships that cover a large part of a student’s full cost of attendance. Another tip to save money is not buying new textbooks. Used textbooks or eBooks can potentially save students hundreds of dollars.
Fisher suggested, “If you’re someone who likes to eat out with friends a lot, try to limit to only eating out once a week, so you can use the most of your meal plan.” Creating a budget and sticking to it is one of the best ways to save money. Nguyen said, “Budgeting is very important, and making sure you know what is coming in and where your money is going is critical. When you first do a budget, it can be very tedious, but at least doing it for a certain amount of time can give you an idea of what is coming in and out so you can estimate and not overspend.”
“Every time you get your check, make sure you put some in your savings account because that will add up over time and will benefit you in the future,” said Lilly. Getting a job while in college is another great example of saving money but it can be hard balancing studies and working shifts. Earning money is always better than spending money. Learning helpful financial tips as young adults will give you a better chance to live debt-free and make life easy.
According to an article from Frugal Confessions, the importance of saving money for students is the difference between you being able to launch into your life after college, or having to live off of your parents. With a similar belief, Lilly thought the benefits of saving money as a young adult prepares you for life and can help pay off student loans after graduation and will help you to afford your own place to live after college. Having a habit of putting money aside can also lessen financial stress, so people do not have to worry if they can afford next semester or wonder where next month’s rent payment is coming from. The key to financial success is being aware of how you are spending your money. Saving money would be one step closer to what some people would say is the goal in life, which is living the American Dream. Money that is saved for the future will set one up for success. Nguyen said it best: “If you save money in college, it will set you up for a better future.”