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5 mistakes college students make while saving

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How can you maximize my savings with low risk.

Since our birth, every parent tries to inculcate a habit of saving as and when it is possible. As a culture, we prefer buying a car with our savings rather than taking a loan and then purchasing the car. Even when it comes to a house, our parents feel that the house that you live in should be owned by you and not rented. The sense of ownership plays a major role in the psychology of people towards different goods.

Now, although some would feel that these myths are absolutely unnecessary, yet, it is important to realize that these myths do exist. It is necessary to break these myths.

Here are some of the 5 myths that college students have when they save:

There is no need to make any fundamental change when you save

While losing weight, we feel that exercise and joining the gym is good enough for us to improve, but dieting forms a major part of the process as well. Much like that, learning to save money consists of undergoing a fundamental change.

The key is by approaching savings as a long term phenomenon rather than a short term one. If you are looking at savings from a short term perspective, a plan for reducing costs can never become a long-term priority.

Understand what kinds of changes are required to make while changing the way you save. This generally includes making changes on how you are spending your money and reducing the current ongoing expenses you have.

Saving cash in hand rather than depositing it in an account

We all receive pocket money in cash. Our relatives gifts us in cash. How do you save it? I am sure you would have stored the money in your cupboard. What does this do? This makes you feel like spending it more often. You might be the type of person who feels that any extra cash that is available must be spent as quickly as possible. You don’t put the money you receive from your part-time job into an account because it’s basically ‘free money’, so you might as well enjoy it.

Find out the best savings accounts available for college students here.

The Student’s Savings Account provides you a savings account with free internet banking and mobile banking. The Student’s Savings Account can be used also for payment of college fees, hostel fees which, in some banks, is free through the account.

Saving money requires you to make a sacrifice

“Kucch paane ke liye kuch khona padhta hain”, although we agree that Shah Rukh Khan is right most of the times, we beg to differ with this statement. There is no need to assume that you must sacrifice in order to be deserving of purchasing any item. Many feel that saving money requires you to deny the things that you enjoy, which makes the entire process rather painful.

The truth is that saving money does not need to be painful, although it will involve making a change in lifestyle related to how you are purchasing your essentials and non-essentials. You might be paying more than you need to for a lot of the items you are currently purchasing.

Buying cheap rather than buying value for money

Many times, in the process of saving, we do not realize that assessing the utility of a certain item is not dependent on the cost, if it is cheap it does not always mean that it is durable. We must look at the value provided by the item we are purchasing.

Let us do an exercise to prove this:

Buy a branded shoe that costs a little more, but will stay with you for longer rather than buying a cheap shoe which will not last for more than a few months. Check out for yourself if the shoe that is more durable provides a far better value for money.

The key to understanding how to save money is by learning how to shop for value. Rather than only looking at the price as the only factor, check out how durable the product is, what the warranty period is and how often will you be using it.

If you like online shopping, then you must stop spending on online shopping

One major mistake that college-going students make is that they stop spending on things they like completely. Learning what is an essential good and what is non-essential is important. The problem, that could happen, is that if stopping to shop your favourite things is done without foresight.

You must stop spending on non-essentials, but not stop spending on your preventive maintenance and basic survival. By learning to make changes that save money, you can help ensure that you save enough for all your financial needs in the future.

The process of saving must begin by opening a savings account. A savings account enables you to get high interest rates earning on your average account balance. The savings account provides you a debit card through which you can make payments from your account as and when required.