Let’s talk about having a savings account.
Money is a topic that makes people have emotions across the entire spectrum. For me, I love talking about money, saving money, and tracking spending.
…But I also love to spend money on traveling.
I blame my dad for both of those.
Growing up, talking about money was completely normal in my house. My dad helped me open my first credit union account when I was 7, and I would proudly deposit money every Friday (my smallest deposit was 11 cents. It was a big day).
I distinctly remember a conversation we had when I was five years old – my dad said that he wanted to take us on a family vacation to Europe and wanted to start saving… For the next three years.
We all worked to prepare for the trip (I contributed $15 for my well-thought-out souvenirs, obvs), and I saw how hard my dad saved for the trip.
It was the trip that changed my life.
I started saving for trips throughout my teenage years, and then saved in earnest for study abroad during my senior year of high school
When I got to college, after talking with many of my friends, it dawned on me that my friends had very different upbringings regarding money.
Many hadn’t talked to their parents at all about finances. Most did not have anything more than a checking account.
I held some impromptu money meetings and evangelized the mindset shift to saving for the future.
Okay, so I need a savings account… Now what?
There is one thing that all college students need to do before going to college: open a savings account.
Do you only have a checking account? That’s a start! Now open a savings account.
Already have a savings account? Well, you’re just a boss. Now open different savings accounts for different items.
Because this is a study abroad blog, I encourage you to consider having at least the following savings accounts if you are planning on spending a significant amount of time abroad. You can have the accounts at the same financial institution; as previously mentioned, credit unions are AMAZING if you are shopping for institutions:
- Primary savings (the “can’t touch this” account; saved for actual emergencies)
- Travel savings (the “actual amount you can spend for travel” account)
Whatever money you make from your part-time jobs, put a lot of it into your primary emergency savings.
You never know what’s going to happen.
I, for one, missed a plane out of Paris. It wasn’t a cheap mistake. If not for my dad bailing me out and me paying him back using that emergency account, I would have been… well, more screwed than I was.
Many adults in the United States do not have any emergency savings at all, and the number of adults who have not made any contributions for retirement savings is downright terrifying.
By establishing healthy financial habits during college, you are setting yourself up for greater successes in the future. If you prioritize saving money for your study abroad program as well as for an emergency fund, you will be prepared for saving for even bigger things once you are out of college.
Savings Part 2: Diversify
So, now that you have a couple of savings accounts, what other savings accounts are ideal?
This entirely depends on your situation. The main goal is to leverage different savings accounts so that an extra, unexpected expense doesn’t completely blow your budget when you don’t expect it.
I currently have the following accounts open across two financial institutions:
- Primary Savings Account ($1,000 for immediate, smaller emergencies)
- Primary Checking Account (the money comes, the money goes… from here)
- Car Savings Account (cars break. This money is for broken car parts and hearts.)
- Insurance Savings Account (so those every-six-month-premiums don’t make me cry)
- Immediate Travel Savings Account (because I want to travel and have access to travel-delegated funds)
Online Bank with a Higher Interest Rate
- Emergency Savings Account (can’t touch this… unless in the event of cancer or other true, real-life emergency)
- Travel Savings Account (can’t access it regularly, but it grows fairly well and I can drain parts of this for larger airfares)
- Future Gift Account (for holiday gifts, birthday gifts, wedding gifts…)
And this list doesn’t include the three different retirement accounts I have open.
There are so many other options for savings accounts, depending on your needs – maybe you are saving for a large purchase (a car? A passport? An around-the-world plane ticket?), maybe you need to pay back some loans, maybe you like going on shopping sprees, and maybe you want to have multiple stashes of money lodged at different banks.
Many financial institutions allow members to have multiple savings accounts. Make sure you know the limit (it’s usually something crazy like 20+), and get on it.
Your spending priorities should also be your savings priorities so you can maintain your budget.
No matter what your financial situation is, planning ahead for unexpected expenses – and having savings accounts dedicated to these expenses – will lessen your stress when not-so-great-things happen. As with anything, start early, save often!
Did your family openly discuss finances growing up? Is it weird for you to discuss budgeting?
Financial Aid 101 – Basics of Federal Aid
Being Cheap Without Missing Out
Prioritize Travel Saving (+ Calculator)
10 Ways to Save Money While Living Abroad
Why Travel with an Emergency Cash Stash