5 Easy Ways to Build a College Emergency Fund
While it's easy to focus on the tyranny of the urgent in college — investing in the things immediately needed for classes, coursework, extracurriculars, and social activities — it's crucial to think about unplanned expenses in college, too.
This is where a college emergency fund enters the chat.
Despite its importance — not only in college but after graduation — only about 39% of college students are actively saving for an emergency fund.
As college students navigate a whole new world of "adulting" — and the bills that go with it — it may be the first time they've been responsible for some or all of their finances, with or without the help of financial aid.
So, it's the right time to begin developing biblical and responsible financial habits — and wisely planning for the unplanned is a big part of this. After all, the unplanned could be anything from unexpected medical bills to a stolen laptop, car problems, unanticipated materials needed for a course, or even an opportunity to expand your learning through a last-minute conference or travel opportunity. Remember: Emergency funds for college students don't necessarily have to involve a negative situation!
While we can rely on God to equip us with what we need, we also must be good financial stewards of our money and practice economic responsibility. Here are five easy considerations for building a college emergency fund.
"And my God will meet all your needs according to the riches of his glory in Christ Jesus." - Philippians 4:19 NIV
How to Build an Emergency Fund as a College Student
1. Set a Savings Goal
Did you know that more than half (57%) of U.S. adults cannot afford a $1,000 emergency expense? That's according to Bankrate's 2024 Annual Emergency Savings Report. While $1,000 may or may not seem like a lot, it's a good starter amount to aim for in your emergency fund — especially if you have any credit card or consumer debt that you're simultaneously paying off.
Once you achieve that $1,000 starter emergency fund, your next goal should be a three-month emergency fund. To calculate three months of expenses, you can look at what you spend on average each month for all your education and living expenses — every single one!
Online tools like college cost calculators can also help you quickly estimate your expenses as you take into account tuition, food, and housing, along with books and supplies, equipment, dorm room essentials, travel expenses, clothes, and more.
Having a specific target goal for your emergency fund can help you stay motivated and track your progress.
2. Create a Budget
Establishing and adhering to a budget in college is an essential part of building a college emergency fund and confidently stewarding your finances — and it will pay dividends now and in the future.
A responsible monthly budget not only helps you prioritize your expenses (like tuition, housing, books, food, and entertainment), but it can also help you avoid impulse spending that can lead to unnecessary debt.
Some of the best budgeting apps include:
These apps take the guesswork out of the budgeting process by easily tracking how much you're spending, saving, and giving.
3. Decrease Your Expenses
This may seem like common sense, but to effectively build up an emergency fund in college, think about ways you can spend less money. Now that you have clarity and insight into your monthly expenses and your budget, look at what you're buying every month and evaluate where you can save.
For example, perhaps you buy fewer expensive lattes or eat out less. There are lots of other money-saving hacks and tips for clothes and other college student shopping essentials that can help reduce financial stress, too. You can also consider downing apps that help put money back in your pocket (like Rakuten).
4. Increase Your Income
While decreasing your expenses can help you contribute more cash to your college emergency fund, increasing your income through a part-time job, paid internship, tutoring, or other flex work is a great option to consider.
Not only will you gain work experience that could help you gain leadership skills while informing your future career, but you'll also earn money that you can use for your savings and your college emergency fund.
5. Take a Financial Literacy Course
Surveys show that many adults (much less students) in the U.S. need help understanding financial literacy. The Unbiased 2023 Financial Confidence Survey revealed that only 33% of people consider themselves somewhat confident in their financial knowledge, with 17% stating that they do not feel financially confident.
Wise financial stewardship, which includes preparing for emergencies, is not only biblical but also builds on a solid foundation in financial literacy. That's why investing time in a financial literacy course during college can pay dividends now and in the future.
DBU offers two courses to help you invest in your financial literacy. The first is Personal Financial Planning, which is a broad overview of the financial planning process with areas of emphasis that include cash and debt management, life and health insurance, investments, college funding, retirement planning, and estate planning. The second is Corporate Financial Management, which covers financial markets, financial statement analysis, financial planning, time value of money, loans and interest rates, and debt policy.
Remember: Put Your Confidence in God
When it comes to emergency funds for college students, along with other college-related finances, there can be several extreme reactions. Some students struggle with anxiety about their daily spending needs and major financial obligations; others may be a bit lackadaisical in how they manage their expenses. Neither is what God wants or asks of us.
Biblical financial stewardship puts God first and foremost in our finances. Yes, you will find true security in God, but this doesn't mean you can take a hands-off approach. When you apply biblical principles to your finances and faithfully save, carefully spend, and thoughtfully invest in the eternal, you can put the rest in God's hands.
