Reasons Why You Should Have an Emergency Fund as a College Student

Being a college student is hard, especially in the beginning. You're in a new environment with new faces and no friends. Likely, you're broke, and only relying on the money that your parents send you every month. 

Sure, if the monthly allowance is more than enough for your basic needs to be met and a little more for fun, then yes, you might not need an emergency fund. But if you're like the other thousands of students who are just scraping by financially, you might need to set up an emergency fund as soon as possible. 

But why should you do it, and how do you set it up?

It's Simple

You might think saving money is enough to create an emergency fund, but no. You have a few steps to follow, but don't worry; it's not that complicated. When you start your emergency fund, it'd be smart to put the money in a separate bank account. A different bank account will have you avoid dipping your hands into it for other matters other than an emergency. It's just easier to manage it this way.

After that, you can start spending small amounts of money regularly or add a small portion of your monthly allowance. It'd also be great if you put money into your emergency fund whenever you have extra money you don't need. If you have a job, you could automate your paycheck to have a percentage directly sent to your emergency fund bank account. Not only will it make your emergency fund bigger, but it will also give you a good money habit. 

That said, the ultimate financial goal that you should have regarding your emergency fund is to have at least three to six months' worth of living expenses in your account.

It Would Benefit You Way After Your Graduation

As a college student, having an emergency fund will help you be more adaptable in emergency expenses and also help create good money habits that you can have in adulthood. But the habit is not the only benefit you can have after graduation. Since emergencies are rare, you can expect to have your emergency fund last longer than you expect, even after graduating. 

That said, you can still use your emergency fund during adulthood, and you can expect it to be very big if you regularly put money into it. Not only that, but your money could also compound, which means the money in your bank account will be bigger because of the interest you've had for years.

College Students Aren’t Financially Literate

College students are financially fragile; there's no way around it. You're young, don't have any credit, and don't even have started a credit report yet. One huge expense, and you might just drop out of school. 

Sure, you can rely on your parents, but most parents nowadays want their kids to live independently. You could also try to get a loan if you need $100 right away, which is where good credit scores come in handy. Unless you're rich, you may not have to worry about these things.

Also, being a college student means you're going to spend a lot of money on textbooks, projects, outings, etc. You can find a job on your own, of course. But you've heard many stories about students working 2-3 jobs and still running out of money due to their expenses at school. 

Some might be lucky to never have had an emergency so far during college years, but would you want to risk it? If you want to feel safe and eliminate that sense of financial fragility that most college students have, create an emergency fund yourself.

It Creates Good Habits

The best time to learn good habits is when you're young and just starting in the world. That said, there's no better time to learn those good habits than during your college years. For most of us, college is the first time we learn to live independently and manage expenses. You can create an emergency fund if you want to learn good money habits.

By creating an emergency fund, you'll learn how to save money, pick the right priorities, and even learn to take into account your spending each month. With all these good habits, you learn to be financially responsible, and this sense of responsibility will be taken up to adulthood. And not only that, you can even take your whole emergency fund to adulthood if you're lucky.

Final Words

Having an emergency fund is very crucial, especially during your college years. Your college years will be rough, especially regarding money, since it will probably be the first time you'll manage it with your own hands. Luckily for you, creating an emergency fund is one simple way to be secure and financially adaptable during your college years.