student savings

3 Things All Students Should Be Saving For

How much do you have in student savings? If you’re like a third of students in the UK, you’ll have less than £100 to fall back on. That means very little back-up in an emergency, and not much to make your dreams happen, either.

The problem is that saving can seem boring, complicated or impossible. The reality is you’re probably just losing out on easy money.

Getting motivated to save

You won’t get excited about saving if you don’t have something to look forward to, so the first step is deciding where you want to be.

Short-term goals: money you’ll need in the next 6 months or by the end of term.

Medium-term goals: things you want to achieve within the next year or two, or by the time you graduate.

Long-term goals: life-changing amounts, or savings you’re willing to work at over 5-10 years or longer.

It’s a good idea to pick one goal from each category to stay motivated. This also means that dipping into savings as you hit targets won’t leave you back at zero. Not sure what to pick? Here are three top goals for students.

Student Savings Goal #1: Back-Up Funds

These savings are your safety cushion when things don’t quite work out. That might include running out of Student Loan, losing a part-time job, or having to replace broken or lost belongings.

As back-up funds can take a while to build up they’re often something you need to work at in the long term. But because most students have to deal with hardship while they’re at uni, it’s really worth saving for this as a priority.

There’s no fixed rule about how much you’ll need, but working up to an amount that covers a week’s worth of your most important costs (rent, food, bills) is a good start.

Student Savings Goal #2: Graduation

The final year of your course can play havoc with your finances. If you get Maintenance Loan, you’ll get less than in previous years (because it’s assumed you’ll finish term earlier).

At the same time, you may have a whole load of extra expenses, including moving costs, rent deposit – sometimes before getting your existing deposit back – and career-related spending, such as work clothes and transport.

In an ideal world, you’d get a job (and get paid) as soon as you finish your course. If not, building up savings can take that pressure off. Having savings also gives you time to consider your options, rather than jumping at the first job you’re offered.

The trick is to stash away small but regular amounts. Even saving just £3 a week over a 3-year course will net you £468 (more if you earn interest from a savings account on top).

Student Savings Goal #3: Retirement

Saving for retirement might sound pointless – especially when money’s short – but there’s a compelling reason to start now. You could retire earlier, or have more cash, than people who put off saving until they’re financially settled.

Secondly, the earlier you start, the easier it gets. You can start with just £3 a week, or 3% of every pay cheque or Maintenance Loan payment. The beauty of using a percent is that it will track your wages as they go up (or down) over time.

Starting early also makes the biggest gains from incentives like the Lifetime ISA (Individual Savings Account). With this account, the UK government chips in as well, potentially earning you up to £33,000 in free cash by the time you’re 50.

Next Steps

It’s entirely up to you what to save for in the short, medium and long-term. Ultimately, you should pick goals that speak to your needs and aspirations, and no one else’s.

To figure out how much to save each week or month, you’ll need to check in with your budget or monthly spending. You can do this but using a money management app like Emma and connecting your bank accounts. This will help identify spare cash and where you can cut costs.

An extra trick is to automate as much of the process as possible. For example, turn on your bank’s auto savings feature (the change from every card purchase you make is automatically pushed into a savings account).

Alternatively, make saving the first thing you do whenever you get paid or do your monthly budget. Learn to skim off a bit from your income and stick it in a savings account, and then adapt to living on the rest.

Finally, remember that you don’t need to sacrifice hundreds of pounds to build up decent savings. Putting aside even a few quid regularly will soon build up, plus you can boost your income with incentives, interest and other rewards.

Guest blog by Ruth Bushi, an editor at Save the Student – the UK’s largest student money advice site.

Edouard Daunizeau

I look after all things Growth here at Emma. I come from France and have spent the last few years scaling consumer tech startups in the UK and beyond. 🚀