# How to save money as a student in India

Source: https://koshex.com/blog/how-to-save-money-as-a-student · Published 13 June 2023 · 9 min read

To save money as a student in India, plan your allowance or stipend each month and move some into savings first. Cut the costs that repeat, avoid card and app debt, and keep your savings in an account in your own name.

## Key takeaways

- Plan your allowance or stipend at the start of each month and move savings out first. Ananya's example sets ₹500 aside before any spending; it is an illustration, not a figure to copy.
- Under RBI's directions to commercial banks, a bank may let a child from age 10 run a savings account alone, within its limits. At 18 the bank takes fresh instructions and a specimen signature.
- A card charges no interest only when the whole bill is cleared by the due date. Pay part, and interest can be charged from the date of each purchase on the unpaid amount.
- No-cost EMI and pay-later plans are still borrowing. RBI's rules say deferred-payment credit through a merchant platform must be reported to credit bureaus.
- Invest only money you will not need soon. Under SEBI's rules a fund has up to three working days to pay out redemptions (five for funds with at least 80% invested abroad).

## How can you save money as a student in India?

Plan your allowance or stipend at the start of each month and cut the few costs that repeat. Stay away from card and app debt, and keep what you save in an account in your own name.

An allowance is the sum your family sends each month; a stipend is a regular payment, for example from an internship.

## How do you make a budget on pocket money or a stipend?

List what is fixed, set a limit for everything else, and move the saving out first. A budget is a plan for what you will spend and what you will keep aside each month.

Here is one student's budget, made up as an example. Ananya is 19, in her second year of engineering, and lives in a hostel in Bengaluru. Her family sends her ₹8,000 a month.

| Where the money goes | Monthly amount |
| --- | --- |
| Mess top-ups and food | ₹4,500 |
| Phone and data | ₹400 |
| Local travel | ₹800 |
| Books and stationery | ₹600 |
| Outings | ₹1,200 |
| Saving | ₹500 |
| Total | ₹8,000 |

The numbers are Ananya's, not a target for anyone else. Her ₹500 leaves first, on the day the money arrives, and the other limits are set around it.

Write the plan down; a notebook or a phone note is enough. [How to track your personal expenses](https://koshex.com/blog/track-your-personal-expenses) shows other ways. The 50-30-20 rule is a rule of thumb for splitting money between needs, wants and saving, not a regulation; [the 50-30-20 article](https://koshex.com/blog/50-30-20-rule) explains it.

## What are the easiest ways for students to cut costs?

Start with what you pay every month.

- **Subscriptions and AutoPay.** UPI is the phone-based system for instant payments from a bank account. Any UPI app lists all your UPI AutoPay mandates, so you can see what is being debited. For card, prepaid and UPI recurring payments, RBI's e-mandate rules give you notice at least 24 hours before each debit, and you can withdraw the mandate at any time.
- **Your phone plan.** If you pay a monthly phone bill, compare it with a prepaid plan that matches how much data you use.
- **Books.** Buy second-hand, borrow from the library, and sell last year's books once the exam is over.
- **Student prices.** Many cinemas, software makers and transport services offer student prices. Ask, and carry your college ID.
- **Food.** Cook with flatmates or split grocery costs. Try buying vegetables and fruit late in the day, when shops clear their stock.
- **A wait before buying.** Give a non-essential purchase a week before you pay. [Ways to stop impulse buying](https://koshex.com/blog/what-are-5-ways-you-can-stop-impulse-buying) has more on this.

## Should students use credit cards, buy now pay later or no-cost EMI?

Each lets you spend money you do not have yet, so they need care while you have no salary. A credit card lets you spend now and pay the card issuer later. Buy now pay later (BNPL) does the same at a shop's checkout.

RBI's directions to commercial banks that issue credit cards set out how a card behaves.

- A card charges no interest only when you clear the whole bill by the due date. The time from a purchase to the due date is the interest-free period.
- Pay only part, and the interest-free period is lost. Interest can then be charged from the date of each purchase on the unpaid amount.
- An issuer can report you as past due, and charge a late fee, only once you are more than three days past the due date. The report goes to the credit bureaus. A credit bureau is a company registered with RBI that keeps credit records and works out your credit score.
- No card can be issued, and no limit raised, without your consent. Unsolicited cards are prohibited.
- On an add-on card, the dues rest solely with the principal cardholder. If a parent gives you an add-on card, the bills stay with the parent.

A no-cost EMI splits a purchase into monthly instalments and is advertised as carrying no interest. EMI stands for equated monthly instalment, the fixed amount paid each month. RBI makes a bank that issues cards show you the principal, the interest and any discount before it converts the purchase, and bars it from calling an EMI that carries interest no-cost. Check that breakdown, and ask whether a processing fee applies. A processing fee is a charge for setting up the loan.

A pay-later plan at checkout is credit too. RBI's rules say deferred-payment credit given through a merchant platform must be reported to credit bureaus. [What a credit score is](https://koshex.com/blog/credit-score) covers the score. [How to check if a loan app is RBI-regulated](https://koshex.com/blog/loan-apps-rbi-regulated) shows how to check the lender before you install anything or share documents.

## Where should a student keep their savings?

In a savings account in your own name, plus a small recurring deposit if you can set aside a fixed sum each month. A savings account holds money you can take out at any time and pays interest. A recurring deposit (RD) takes a fixed amount from you every month for a set period.

### What can you open at a bank?

RBI's directions to commercial banks, applicable from 1 July 2025, say a bank may allow a minor to open savings and term deposit accounts (a term deposit is another name for a fixed deposit) through a guardian, the adult who opens and runs the account on the child's behalf. A minor is a child under 18. From age 10, a bank may let the child run the account alone, within limits the bank sets.

At 18, the bank takes the new adult's own signature and fresh operating instructions, and the guardian's role ends.

You also need the bank's KYC. KYC stands for know your customer, the identity and address checks a bank must do. You need an identity and address document such as Aadhaar, a passport or a voter ID, and your PAN, or Form 60 if you have none. PAN is the permanent account number from the income-tax department.

### What about the post office?

India Post accepts savings, RD and time deposit (the post office's fixed deposit) accounts from a minor who has turned ten. A post office savings account needs ₹500 to open, and ₹500 must stay in it. The savings rate is 4% a year for October to December 2026. A post office RD starts from ₹100 a month and runs five years. If you close it early, after three years, it pays the 4% savings rate.

### What does a bank pay, and what happens to a small RD?

Rates differ from bank to bank and change over time. Here are SBI's. SBI's RD page (updated April 2026) says the RD runs 12 to 120 months, with instalments from ₹100 a month in multiples of ₹10, at the fixed deposit card rate for the tenor. For a deposit of one year to less than two years, SBI's general public rate was 6.25% from 15 December 2025.

Take Ananya's ₹500 a month for 12 months at 6.25%, assumed to stay the same all year. She pays in ₹6,000, and the [recurring deposit calculator](https://koshex.com/calculators/recurring-deposit-calculator) shows about ₹6,206 at the end. That is arithmetic on an assumed rate, not a forecast. [What a recurring deposit is](https://koshex.com/blog/what-is-a-recurring-deposit) explains more.

DICGC, the RBI-owned body that insures bank deposits, covers up to ₹5,00,000 per depositor per bank, principal and interest together.

### Do you need to keep a minimum balance?

Under RBI's directions to commercial banks, every bank must offer a basic savings (BSBD) account as a normal banking service available to all. It has no minimum balance and no initial deposit. It comes with a debit card that has no annual fee, and at least four free withdrawals a month, counting transfers and ATM transactions. Digital payments do not count towards those four. A holder cannot open another BSBD account in the same bank or in any other bank.

In a regular savings account, a bank that wants to charge for a low balance must first send notice of the shortfall. It must give you a month to top up. The charge must be directly proportionate to the shortfall, and it cannot push the balance below zero. Scholarship accounts under government schemes must be free from minimum-balance restrictions.

## Can students start investing?

Yes, with money you will not need for several years. Money for this term's fees or next month's rent belongs in the bank.

A mutual fund is a pool of money from many people, invested by a professional manager under SEBI rules. Under SEBI's rules, a fund has up to three working days to pay out redemptions, or five for funds with at least 80% invested abroad. To redeem is to sell your units back to the fund for money.

A SIP invests a fixed amount at regular intervals, buying units at that day's NAV, the price of one unit. You need KYC before you invest.

If you are under 18, a fund held in a minor's name pays redemption money only into the minor's own verified bank account. Its SIP instruction is suspended when the minor turns 18, until the status is changed to major. [Mutual funds in a minor's name](https://koshex.com/blog/pros-cons-of-investing-in-mutual-funds-in-a-minors-name) has the details.

Check what any app charges. FINRA, a US regulator, warns: "Even a nominal monthly fee can have a big impact on your returns for a small account."

For starting small, see [what micro-investing is](https://koshex.com/blog/what-is-micro-investing) and [ways to invest ₹1,000](https://koshex.com/blog/9-best-ways-to-invest-rs-1000). When you land your first job, [financial tips for young adults](https://koshex.com/blog/12-financial-tips-for-young-adults) picks up from here.

## How do you save money as a teenager?

The habits are the same at a smaller scale. Keep a jar, or a bank account held with a parent. Pick a goal, and decide in advance what happens to gifts and pocket money.

[How to teach children about money](https://koshex.com/blog/how-to-teach-children-about-money) is written for parents.

## Frequently asked questions

### How can I save money as a student in India?

To save money as a student in India, plan your allowance or stipend each month and move some into savings first. Cut the costs that repeat, such as unused subscriptions and a phone plan you outgrow. Keep your savings in an account in your own name. SBI's recurring deposit page (updated April 2026) lists instalments from ₹100 a month.

### How can I save money as a student with no income?

Plan the allowance or stipend you do receive, set a limit for each line and move your saving out on the day the money arrives. Start by cutting costs that repeat every month. SBI's recurring deposit page (updated April 2026) lists instalments from ₹100 a month, and so does a post office recurring deposit.

### Can a student open a bank account without parents?

From age 10, RBI's directions to commercial banks let a bank allow a child to run a savings account alone, within limits the bank sets. At 18, the bank takes your fresh operating instructions and specimen signature. You need the bank's KYC: an identity and address document such as Aadhaar, a passport or a voter ID. You also need your PAN, or Form 60 if you have none.

### Should a student get a credit card?

A card lets you spend before you pay, and it carries interest unless you clear the whole bill by the due date. If you pay only part, RBI's directions to banks that issue cards end the interest-free period. Interest can be charged from the date of each purchase on the unpaid amount. No card can be issued, and no limit raised, without your consent.

### Is buy now pay later or no-cost EMI safe for students?

Both are still borrowing. RBI's rules say deferred-payment credit given through a merchant platform must be reported to credit bureaus. RBI's directions to banks that issue cards make the bank show principal, interest and any discount before converting. They also bar it from calling an EMI with interest no-cost. Check for a processing fee too.

### Is education loan interest tax deductible?

Interest on an education loan can be deducted under section 129 (the old Section 80E). This applies only if you file under the old tax regime, the older rules that allow deductions. The loan must come from a bank, a notified financial institution or an approved charitable institution. It must be for the higher education of yourself, your spouse, your children or a student you are guardian of. The deduction runs for the year interest starts and the next seven tax years, or until the loan is paid off, with no cap.

### Is a scholarship taxable in India?

A scholarship granted to meet the cost of education is left out of total income under Schedule II of the Income-tax Act, 2025. So it is not taxed. A stipend from an internship may be taxed like pay. Check how it is paid.

*This article explains how things work; it is not advice to buy or sell any investment. Mutual fund investments are subject to market risks, read all scheme related documents carefully.*