student budgeting guideline
This is an excerpt from my son's university money blog. It can help start the budgeting process for students. I especially love the part of savings = "just not spending". A lot of non-students should embrace that philosophy as well 😀.
The 50/30/20 budget is an approach where you budget based on a percentage of your income.
- 50% of your monthly income goes to necessities. That’s rent, groceries, cell phone and internet, that kind of thing. The basics that you need, no matter what else is going on.
- 30% of your income goes to spending. This is everything from new clothes, to coffee on campus, to ordering pizza with friends (because no, takeout pizza isn’t a grocery). This is the “realistic” part of the budget, because you need to allocate some money to this stuff for when you inevitably spend on it.
- 20% of your income then goes to savings—and because you’re a student, let’s call this “just not spending” instead. Especially since you’re planning for getting through the semester, use this 20% as a buffer in your budget instead of thinking of it as untouchable savings. Don’t plan to spend it, so that you know it’s there if something comes up later in the semester.
50/30/20 is for more than just students. It was most popularized by Elizabeth Warren’s book All Your Worth. It is much-debated but still, IMO, a great general guideline, especially when the finer lines about what are must-haves vs. wants vs. savings as she defines them are followed. It’s good for benchmarking and assessing how tenuous one’s financial situation is, even if it isn’t used for budgeting.
Smart of your son’s school to get students thinking about this balance early.
Another good explanation of it: https://www.investopedia.com/ask/answers/022916/what-502030-budget-rule.asp
I love this! It looks like the school is taking well known financial guidelines and translating them for students. I hope you'll share any other gems you find on the site!