3. Spend Less Save More

Cut it Out

Look over your spending diary to find expenses that you can decrease. Look at each expense to determine if it is a need or a want

  • need is something that you can’t do without - like having a place to live or food to eat. 
  • want is something that you would like to have, but could do without, for instance cable TV, replacing a stolen car stereo or eating at restaurants. 

There are some easy ways to reduce your wants: eat at home, get rid of cable or do without a new stereo. More difficult changes might also be necessary, like moving to a less expensive apartment or trading in your car for a cheaper model. Making the harder choices can be easier when you put it in context with your goals: will this expense today support my goals tomorrow?

should I buy it flow chart

Increase your flow

If you have cut costs as far as you can and your income still does not meet your essential needs, it’s time to increase your incoming flow of money. Getting a second job or finding a better paying job can solve this problem. You may need to adjust your college schedule to do this which means it might take a little longer to graduate. If that’s the case, try and find work that is closely related to your intended career after college. This will help you make connections in your chosen career field and you may even be able to use your experience as credits for your degree program.

You could also try to sell some items you no longer need or use, take on a roommate if you have extra space or find someone who wants to car-pool with you to work or school and chip in for gas and parking. 

Accessing community resources such as food stamps may help you temporarily to balance your spending plan. Prosperity Planner from WorkSource Oregon will help you determine if there are resources in state or federal programs that you might be eligible for. 

Get $3 for every $1 you save

If you are saving for college, you should look into setting up an Education Individual Development Account (IDA). These accounts will match your savings - this means that they will contribute $3 for every $1 you put in your savings account! In case you can't tell, that's an amazing deal. 

IDAs are offered by community-based organizations. To get started, take the IDA Eligibility Quiz, then contact one of the organizations listed to find out how to apply. 

In case of emergency, save cash!

Many financial advisers say that once you gain control of your basic living expenses and reduce your spending, then you should think about setting up an emergency fund. An emergency fund is your financial cushion in case something unexpected happens. What are emergencies? An emergency might include dental expenses to repair a cracked tooth, or unexpected veterinary care for your cat that has eaten poisonous slug bait. It may be money you use in the case of a natural disaster, or for an unexpected car repair. 

Studies indicate that people who don’t have an emergency fund are more likely to go into debt. It may feel like you can’t afford to put this money aside, but you can’t afford not to! Even college students need an emergency fund.

How much do you need in your emergency fund? There is no one right answer but many experts say you should budget three to six months of normal living expenses for emergency savings. So if you have a monthly budget of $1,500, you should try to set up an emergency fund of at least $4,500.

Bank on it!

Why do I need a bank account?

Having a bank account is important for several reasons. For one, it is virtually impossible to obtain credit without a bank account, and at some point everyone will have some kind of credit need. Additionally, banks are the most secure way to keep your money. As a customer, your money is covered by insurance, and in most instances if you have to deal with lost or stolen checks or bank cards, the majority of your money will be protected. Finally, choosing the right banking services will actually earn you more money than just paying cash. Banks and credit unions offer a variety of account types to help you save and track your money. For the most basic services, you will pay only a few dollars a month to use a bank to keep and access your money.

What are my options for personal banking?

Generally, you have four options for personal banking:

Credit Unions
  • receive deposits
  • cash and pay checks
  • provide loans and other financial services
  • member owned, non-profit institutions 
  • members generally have something in common, such as work 
  • fees are usually lower than at banks because they are member owned
  • make money for their members!
Community Banks
  • receive deposits
  • cash and pay checks
  • provide loans and other financial services
  • limited local branches
  • focus on the local community
  • usually have a board of directors that includes community members
  • use customer deposits to fund local investments
Big Banks
  • receive deposits
  • cash and pay checks
  • provide loans and other financial services
  • have branches nationally and internationally
  • US Bank and Chase are examples of big banks
  • make money for investors by charging fees for services
Check Cashing and Payday Loan Services
  • cash checks for a high fee
  • provide short-term loans for a high fee
  • usually have very high interest rates on loans
  • make money off of you by charging high fees for services

Some things to consider when choosing a bank:

  • Do they offer any special accounts for students?
  • What are the fees for the services I am most likely to use?
  • What are the over-draft policies? 
  • What are the deposit policies? 
  • Does the bank offer customer service when and where I need it? 
  • What is the minimum balance I need to keep on a checking or savings account? 
  • What is the interest I can earn on money kept in my savings or checking account?

Asking these questions can help you reduce the fees for services you will use often, such as writing checks, speaking with a teller or using on-line banking services.