I'm not really sure of the number of younger readers that I have, but I'll be sharing some numbers on saving money as a student, the importance of doing so as well as some tips on saving money as a student. Saving is a habit that should start from young and hope to encourage younger readers to adopt this good habit as well.
(Image source: http://timobrienhomesblog.com/2010/07/09/summer-energy-saving-tips/)
Let's look at the numbers for a Secondary student. Assuming that you get an allowance of $10 a day ($50 a week, ~$2000 a year, if you only get this allowance on weeks with school, which would be around 40 weeks) and you have to pay for one meal a day at school (~$3) and transport to and from school (~$10 a week). With these assumptions, you will save $25 a week or roughly $1000 a year. With other extras such as red packets during Chinese New Year for the Chinese, this sum may be larger than $1000, but I'll just balance out outings with friends with these extras for simplicity's sake. So, with 4 years spent in secondary school, you will be able to save a tidy sum of $4000.
While $4000 doesn't seem to be a large amount, but given enough time, it will be able to grow. If you invested the amount and left it there until you retire at age 65, you will already have an extra $100,000 to retire on. Since you are still young, there is plenty of time for your money to compound (more covered on Key to Growing Wealth). This 25 times increase in your money between graduating from secondary school and retiring would show that saving money as a student is very useful due to the effect of compounding.
If we go on to Junior College/Polytechnic and assume that your allowance increases to $15 a day ($75 a week, ~$3000 a year with the same assumptions) and the cost of a meal increases to $4 while transport will remain the same for JC students but increase for Poly students, so for the Poly students, let's assume that transport costs increases to $25 a week. A JC student would be able to save $45 a week, $1800 a year and $3600 in the two years in JC, while a Poly student would be able to save $30 a week, $1200 a year and $3600 in the three years in Poly. These values would be able to compound at an almost similar rate as the secondary school example. (If some of my assumptions are off please forgive me :))
Students should be able to save a tidy sum after their graduation and by saving this money and investing it (through a low-cost broker), would be able to accumulate small numbers of shares as their savings grow. But then how are students able to save more?
Reduce outings with friends
I'm not telling you to stay at home and shun outings with friends, but rather just go out with a handful of good friends. Instead of agreeing to every gathering and outing that comes your way, pick those with friends whom you are closer to. This would reduce the number of outings that you attend, which usually put a large strain on your finances especially if you and your friends go to very atas places for gatherings.
Take up part-time jobs
If you have enough time after school, instead of hanging out with friends or spending time on the computer, taking up a part-time job is a good way to increase the amount of money that you can save. Alternatively you can pick up a part-time job during the school holidays to help give your savings a boost while helping you build interpersonal skills and problem solving as well.
Eat or prepare meals at home
Eating more meals at home or preparing meals at home and bringing them to school is another way to help reduce the cost of food. Preparing food at home would help to save some money and reduce the risk that you will follow your friends to the nearby fast food outlet which will cost a lot more than a school or home-prepared meal.
These are just some suggestions that I have, if you have any other suggestions that you use, feel free to bring them up in the comments. Saving up while young will allow compounding to work its magic, which would give you a great advantage over someone who starts out later than you do, maybe when they start working or even later.
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Let's look at the numbers for a Secondary student. Assuming that you get an allowance of $10 a day ($50 a week, ~$2000 a year, if you only get this allowance on weeks with school, which would be around 40 weeks) and you have to pay for one meal a day at school (~$3) and transport to and from school (~$10 a week). With these assumptions, you will save $25 a week or roughly $1000 a year. With other extras such as red packets during Chinese New Year for the Chinese, this sum may be larger than $1000, but I'll just balance out outings with friends with these extras for simplicity's sake. So, with 4 years spent in secondary school, you will be able to save a tidy sum of $4000.
While $4000 doesn't seem to be a large amount, but given enough time, it will be able to grow. If you invested the amount and left it there until you retire at age 65, you will already have an extra $100,000 to retire on. Since you are still young, there is plenty of time for your money to compound (more covered on Key to Growing Wealth). This 25 times increase in your money between graduating from secondary school and retiring would show that saving money as a student is very useful due to the effect of compounding.
If we go on to Junior College/Polytechnic and assume that your allowance increases to $15 a day ($75 a week, ~$3000 a year with the same assumptions) and the cost of a meal increases to $4 while transport will remain the same for JC students but increase for Poly students, so for the Poly students, let's assume that transport costs increases to $25 a week. A JC student would be able to save $45 a week, $1800 a year and $3600 in the two years in JC, while a Poly student would be able to save $30 a week, $1200 a year and $3600 in the three years in Poly. These values would be able to compound at an almost similar rate as the secondary school example. (If some of my assumptions are off please forgive me :))
Students should be able to save a tidy sum after their graduation and by saving this money and investing it (through a low-cost broker), would be able to accumulate small numbers of shares as their savings grow. But then how are students able to save more?
Reduce outings with friends
I'm not telling you to stay at home and shun outings with friends, but rather just go out with a handful of good friends. Instead of agreeing to every gathering and outing that comes your way, pick those with friends whom you are closer to. This would reduce the number of outings that you attend, which usually put a large strain on your finances especially if you and your friends go to very atas places for gatherings.
Take up part-time jobs
If you have enough time after school, instead of hanging out with friends or spending time on the computer, taking up a part-time job is a good way to increase the amount of money that you can save. Alternatively you can pick up a part-time job during the school holidays to help give your savings a boost while helping you build interpersonal skills and problem solving as well.
Eat or prepare meals at home
Eating more meals at home or preparing meals at home and bringing them to school is another way to help reduce the cost of food. Preparing food at home would help to save some money and reduce the risk that you will follow your friends to the nearby fast food outlet which will cost a lot more than a school or home-prepared meal.
These are just some suggestions that I have, if you have any other suggestions that you use, feel free to bring them up in the comments. Saving up while young will allow compounding to work its magic, which would give you a great advantage over someone who starts out later than you do, maybe when they start working or even later.
If you have enjoyed this post and would like to receive notifications on new posts, please subscribe to my blog via email
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