How to Open a High-Yield Savings Account as a College Student
Managing and saving money is essential for college students. Read on to learn about the benefits of high-yield savings accounts and how to open one.
As a college student, learning how to manage your money is essential. Saving is crucial if you want to get ahead. Your savings should be aimed at keeping some of your cash in a safe place that’s relatively accessible.
The point of saving isn’t to grow your wealth. Instead, it’s designed to give you access to money you can use in an emergency. Your savings account can also provide you with a way to save up for larger purchases over time so you don’t go into debt.
You don’t need a lot of money to get started. Even getting in the habit of setting aside $10 a week for savings can establish a solid foundation for your financial future. When deciding how much to save, take a look at your budget. Is there room for you to set aside a few dollars a week?
If you don’t feel like you have any extra room to save, review your recent spending. Are there items that you can cut out? Are there places to save? Chances are you can find at least a few dollars a week. Begin by setting that aside.
How to open a high-yield savings account
Deciding where to keep your savings is another issue. Because your savings account is meant to keep your money safe, many experts recommend that you open a high-yield savings account. Your savings account isn’t designed to help you build wealth for the future — that’s what your investment account is for. Instead, your savings account is meant to ensure that you have access to money when you need it.
While the rates on high-yield savings accounts might not seem all that high, they can help you get a little more out of your savings accounts. To find a high-yield savings account, consider looking online. You’re more likely to find a bank that pays above-average yields when you take the search online. Another option is to look into a community bank or credit union.
Once you find an account that works for you, here’s what you need to get started:
- Legal name
- Social Security number
- A way to fund the account
In many cases, you’ll be able to fund your high-yield savings account by connecting to your current primary checking account. If this is the case, you need to have your checking account number and bank routing number handy.
How to make saving easier
Developing the saving habit can feel challenging at first, but there are some ways you can make it easier.
Rather than trying to start with a large amount of money, break it down into smaller amounts. It might not seem like much, but starting small can have big impacts later.
Begin by saving $1 per day or even $15 a week. Figure out what makes sense for your budget and your current situation. Break it down into a manageable amount. Over time, as you get used to saving, you can increase the amount you set aside regularly.
Create a saving target
Having something to aim at can help you succeed in the long run. Set different saving targets so you have things to work for. For example, consider setting a target of getting your savings account to $500. If you set aside $20 per week, you can reach that goal in about six months.
Once you reach your target, set a new goal. Maybe, after you reach your first target, you decide to increase how much you set aside to $25 a week to help you reach your goal of building your account to $1,000. Now, you’re hitting your goals faster and the saving habit is part of your financial planning.
Make it automatic
The best way to make sure you don’t forget to save is to make it automatic. Many high-yield savings accounts allow you to connect a bank account and set up automatic transfers. That means you can have your money automatically moved each week or month — or however often you want to put money in your savings account.
Another option is to use an app that helps you identify missed savings and transfer them into an account. Apps such as Digit can help you save more effectively. Additionally, there are some financial accounts, such as those at Betterment, that will use a two-way sweep feature to automatically move excess money in your checking account into a savings product with a relatively high yield. Look for ways to boost your savings with automatic tools that allow you to move your money without having to think about it.
Too often, it’s easy to save after you’ve done everything else. Instead, prioritize your saving strategy. Put that line item at the top of your budget and make it part of your plan to improve your finances.
If you’re trying to free up more money for saving, you can look into products designed to save you money while you’re in college. Low-cost student loans, such as those from Juno, can result in lower monthly payments while you finish school. If you have to get undergraduate student loans, do your best to keep your costs and fees low so you can set aside more money for emergencies. That also works if you need graduate student loans.
Saving is an integral part of making the most of your money and establishing a sound financial foundation. Even though you might feel like a broke college student, you can probably get started with saving. Open a high-yield savings account and start putting money — no matter the amount — aside. Your future self will thank you.
Miranda has 10+ years of experience covering financial markets for various online and offline publications, including contributions to Marketwatch, NPR, Forbes, FOX Business, Yahoo Finance, and The Hill. She is the co-host of the Money Tree Investing podcast and she has a Master of Arts in Journalism from Syracuse University
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