Title: How I Built an Emergency Fund as a College Student and Why It’s Essential for My Financial Security
As I navigated my college years, I was initially focused on making friends, acing my classes, and having fun. However, my financial priorities shifted when I realized the importance of saving for the future. Building an emergency fund has been a game-changer for me, providing a safety net for unexpected expenses and alleviating financial stress.
According to experts, an emergency fund should be easily accessible, such as in a savings account, and should not be used for non-essential expenses. I chose a high-yield savings account for my emergency fund since it earns more interest and allows me to withdraw my money at any time.
I researched various high-yield savings account options and ultimately chose Jenius Bank, which offers a high APY, no fees, and no minimum balance requirement. I also considered LendingClub LevelUp Savings Account, which offers a boosted APY if I make monthly deposits of at least $250. However, I opted for a more traditional high-yield savings account with no minimum deposit or monthly fees.
As a college student, I was able to save around 40% of my monthly income by following the 40-40-20 budgeting rule. I allocate 40% of my income towards necessities, 40% towards savings, and 20% for discretionary spending.
I established an emergency fund and a retirement fund, with a higher focus on the former since I’m unsure about my post-graduate years. I automatically transfer a set amount from my checking account to my emergency fund, ensuring that I save consistently.
If you’re a college student looking to start an emergency fund, consider the following:
1. Assess your situation, savings habits, and long-term goals.
2. Create a savings goal, aiming for 3-6 months of necessary monthly expenses or an initial sum of $1,000.
3. Set a monthly contribution based on your income and anticipated costs.
4. Automate your savings by setting up automatic transfers between your checking and emergency fund accounts.
5. Keep your emergency fund separate from your regularly funded savings or other financial goals.
By following these steps, you can start building an emergency fund that will help you stay financially secure and prepared for the unexpected.