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If you're a college student who wants to stretch the value of your dollar then a few easy steps will help you achieve your goal. You can quickly learn your spending trends, reduce impulse purchases and create your own cash reserve at the same time.
The first step is to estimate your living expenses for the next 90 days. This includes your rent, cell phone bill, groceries, gas, entertainment expenses, etc. I recommend using a free online template such as the one at mvelopes.com to save time.
Your next step is to put the money you'll need to meet your expense into a checking, savings, or money market account where you can make withdrawals at any time. This will be your "operating account" for the next three months.
Then, place any money in excess of your estimated living expenses into a 90-day Certificate of Deposit (CD), which can be purchased at most banks. The minimum deposit required for a CD is typically $500 and it will pay a higher rate of interest than a savings or money market account. Your invested money will not be accessible for the duration of the CD, which will limit your ability to make impulse purchases and at the same time maximize your rate of return. Once the 90-day CD matures, recalculate your living expenses and repeat the process. You'll see the size of your CD grow each quarter and this will become your emergency fund or down payment money for your first home.
By following this plan you'll be surprised how much money you save and will learn for the first time where your leakage occurs. This is the few dollars or few hundred dollars that seems to have disappeared from your account at month's end.
Here's How It Works:
1) Estimate your living expenses.
2) Deposit your living expense money into a highly liquid account.
3) Purchase a 90-day CD with your excess money.
4) Repeat each quarter and watch your money grow.
Contact Information:
Matthew M. Brandeburg
John E. Sestina and Company
1161 Bethel Road, Suite 201
Columbus, OH 43220
(614) 326-3077 ext. 112
Mbrandeburg@sestina.com
