The Budgeting Rule of 50/30/20 ❌ doesn’t work for you, for this simple reason 👇🏼
How can you overcome the pain in the cash during those unexpected emergency times? How can you help your parents save money without them even knowing about it?
First, let’s understand what 50/30/20 means, and then why it is not the best way to budget.
It is a simple and effective way to manage your finances. It recommends that 50% of your income should go towards necessities like rent, utilities, and groceries, 30% – to your wants like entertainment and eating out, and 20% – to future goals or paying off debt.
However, the usual 50/30/20 doesn’t work for college students like you, as most of you do not get a huge sum of money from your parents that’s almost double your necessities like rent, utilities, and groceries.
In college days, we used to struggle on days when we had to travel somewhere outside, register for a worthy event or meet some urgent emergency needs. I had to always call my dad for anything that came in unexpectedly. This happens to everyone, right?
The problem is even our parents cannot take up some unexpected expenses from our end. It sometimes leads to a stressful situation in their finance. Hence, saving a little every month is very important.
As a college student, managing your finances can be challenging, especially if you’re relying solely on pocket money from your parents. But that doesn’t mean you can’t create a budget and take control of your spending.
I’d like to share my proactive budgeting technique, which will help any college student to be debt free and stress-free for their parents as well. It very well works for me, and I believe it can be helping you as well, especially if you’re staying away from home and in hostels, with your friends.
✅ As a first step, always set a higher expectation for pocket money. Ask for 50% more of your actual pocket money that your parents are planning to give you.
This will not stress your parents, as they’ll start budgeting accordingly to get used to your ask. This is far better than seeking them for a bigger amount as an emergency or sudden requirement.
✅ Break down your pocket money into
- Actual Money (AM): The money that your parents planned to give you.
- Excess Money (EM): The money that you got more than what your parents planned.
✅ 70% of your Actual pocket money (AM) should go towards your essential expenses, such as food, transportation, and other necessary items.
✅ 20% of your Actual pocket money (AM) can be saved for your productive weekend needs, during which you’ll be attending different events, meeting new people, networking, etc.
✅ The remaining 10% of AM can be spent on fun and leisure activities, such as eating out with friends and watching movies.
✅ Be genuine to yourselves, to use the Excess Money (EM) only when it is unavoidable and super important.
✅ Keep all your excess pocket money (EM) as a saving, and use it when required for your emergency needs.
By following this rule, you can ensure that you’re not overspending on unnecessary items and are allocating your money wisely. It also encourages you to save for future goals and avoid excessive debt.
Moreover, you do not stress your parents by asking for bulk money for a sudden and urgent requirement.
When I was a college student, I struggled with budgeting and often found myself running out of money before the end of the month. In some situations, when I needed bulk money, I used to put that stress on my parents and sometimes blamed them for not being on time.
But the 70/20/10/X rule is something which I realized later on, would work out for a college student who stays away from home and hostels.
An important thing is, you’ll be able to take control of your finances and create a sustainable budget only if you are debt free.
Budgeting has helped me develop better financial habits, which have served me well professionally.
Remember, budgeting may seem challenging at first, but it’s a valuable skill to have. Now, I do my budget every end of the month and I’m used to seeing the ups and downs of our living, and I get to tune it every month.
It can help you make better financial decisions, avoid debt, and achieve your future goals. So, take control of your finances today with the 70/20/10/X budgeting rule!
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