moonchild
VIP Contributor
The 50/30/20 rule involves dividing your income into three categories: 50% for necessities, 30% for discretionary spending, and 20% for saving. Let's break down each category and how you can implement it in college, this is one of the best way that will help you in achieving your saving goals without stress.
Necessities: This category includes all of your essential expenses such as rent, food, utilities, and transportation. Aim to spend no more than 50% of your income on these expenses, these are your mandatory expenses, that is why they are taking the largest share. to save money, consider living with roommates or in the school dorm, cooking your meals instead of eating out in restaurant, using public transportation, and looking for better and cheaper options in whatever you want to buy.
Discretionary spending: This category includes all of your non-essential expenses such as entertainment, internet bills, shopping, and dining out. Aim to spend no more than 30% of your income on these expenses. to save money, consider looking for free or low-cost entertainment options such as campus events or outdoor activities like basketball with friends. Limit your dining out to special occasions because it is expensive, you can even shrink it to the extent of having some leftovers from this budget.
Saving: This category includes all of your long-term financial goals such as building an emergency fund, starting a business that you want, or saving for a future education like a graduate school. aim to save at least 20% of your income. to make saving easier, set up automatic transfers from your checking account to a savings account or investment account, I will always prefer investment account because your money will multiply easily like that.
This rule is very simple, it is not bloated with extra details, just do as it suggests and you will have all the rewards.
Necessities: This category includes all of your essential expenses such as rent, food, utilities, and transportation. Aim to spend no more than 50% of your income on these expenses, these are your mandatory expenses, that is why they are taking the largest share. to save money, consider living with roommates or in the school dorm, cooking your meals instead of eating out in restaurant, using public transportation, and looking for better and cheaper options in whatever you want to buy.
Discretionary spending: This category includes all of your non-essential expenses such as entertainment, internet bills, shopping, and dining out. Aim to spend no more than 30% of your income on these expenses. to save money, consider looking for free or low-cost entertainment options such as campus events or outdoor activities like basketball with friends. Limit your dining out to special occasions because it is expensive, you can even shrink it to the extent of having some leftovers from this budget.
Saving: This category includes all of your long-term financial goals such as building an emergency fund, starting a business that you want, or saving for a future education like a graduate school. aim to save at least 20% of your income. to make saving easier, set up automatic transfers from your checking account to a savings account or investment account, I will always prefer investment account because your money will multiply easily like that.
This rule is very simple, it is not bloated with extra details, just do as it suggests and you will have all the rewards.
