What an Emergency Fund Actually Looks Like for Student Renters

This article is brought to you by GradGuard. We protect college students and their families from the financial risks of college life, like providing a refund for tuition or replacing a stolen backpack when your school may not. When the unexpected happens, GradGuard’s tuition insurance and renters insurance can help you get back on track.

An emergency fund is essential for everyone, yourself as a student renter included. You never know what is going to happen, whether it’s a medical emergency, your laptop breaks during finals week, or you need to pack up and move immediately.

While you always hope you never have to use it, you still need to have an emergency fund for those “just in case” moments. While traditionally, people suggest saving anywhere from three to six months of your average living expenses, that’s not always realistic for a full-time college student navigating rent and other high bills. An emergency fund for student renters isn’t going to be the same as someone ten years into their professional career. Here is what an emergency fund actually looks like for student renters.

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Assess Your Situation

You should already have your budget planned so that you don’t find yourself in a deficit every month. Use that to assess your situation and see how much you are saving on average. While you naturally want to keep some money as a simple rainy day fund or for going out with your friends, assess how much you can reasonably save. Consider transferring a good chunk of money into an emergency fund, if possible, to get started and add on from there.

Depending on your budget and how much you make, you might want to add more or less each week or month to save more. Be realistic and don’t put money into your emergency fund if you will need it for common expenses such as groceries.

In a Separate Bank Account

Open a separate, high-yield bank account solely for your emergency fund. Not only does having it separate from the rest of your money prevent you from dipping into it, but you can still withdraw your money without penalty.

Even though the annual percentage yield might not be high enough to drastically increase your emergency fund, it does help you gain a little extra money. The more you have in your emergency fund, the more you will gain every month.

Many banks even offer special promotions to students opening up new accounts. Don’t be afraid to investigate local credit unions and ask if they offer promotions for students. If not, don’t worry. There are still a lot of banks to choose from. Do some research and see which offers a good APY and has low minimum deposits.

Automatic

As a student, you have a lot of things on your plate and on your mind. To help you keep growing your emergency fund while not constantly stressing about it, set up automatic deposits–the same way you should have your rent and credit card payments on autopay! You likely have direct deposit set up with your job, and your paycheck is deposited into your bank account right away. Most allow you to separate amounts or percentages to go into a different bank account. When you do this, your emergency fund continues to grow without even stressing about it. It doesn’t even have to be a large amount. Even $10 a week, while it doesn’t sound like a lot, adds up quickly over the course of a year. You’ll grow over $500 while not consciously putting in any effort, which is great so you can focus on your studies.

Protect Yourself

In order to prevent yourself from dipping into your emergency fund, you can look into protecting yourself with renters and tuition insurance. GradGuard offers policies specifically for students with low rates that don’t break the bank. GradGuard helps you protect your investments. For example, if something were to happen to your apartment, be it theft or fire, GradGuard would protect your laptops, clothing, furniture, and more. By utilizing their policies, you wouldn’t have to use your emergency fund if you did come face to face with theft or smoke. Renters insurance might seem like an unnecessary expense, but you don’t want to be caught in a situation without it.

Don’t Dip Into Your Emergency Fund

No matter what, do not use your emergency fund no matter what, unless it is an actual emergency. Don’t use it for eating out or going on a shopping spree. Your emergency fund can only be of use to you if you actually save it. As tempting as it might be, you need to keep it. Any use will negate the idea of even having an emergency fund.

Every student renter’s emergency fund is going to look a little different, based on how much they make and how much their other bills are, so don’t compare yourself to your friends or other students who might have wealthier families. Once again, you should be realistic. Don’t bite off more than you can chew and save what seems right for you.

If you have to use your emergency fund, try to replenish it as soon as possible. It is always best to be prepared for as long as possible.

It’s no secret that college costs a lot of money. Make sure your investment in higher education is protected with GradGuard. Our affordable tuition insurance and renters insurance plans are specifically designed for college students. Customizable plans make it easy to protect your tuition, room and board, laptop, bike, and so much more.