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Aug 29, 2016 05:59 AM EDT

A Simple Budgeting Rule For College Students

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Budgeting may seem impossible, especially for college students with very limited resources. However, it is important to learn this lesson as early as your freshman year since it will mean the difference between a healthy financial state or a struggling one.

According to Mint, budgets are more than merely being able to pay bills on time. Budgeting is also about knowing where your money goes and how much you should be spending or saving.

The 50/20/30 rule, also known as the 50/30/20 budget, is a simple budgeting guideline that can be very helpful for college students. This particular idea allows you to keep your spending aligned with your saving goals.

This can be a perfect way to jumpstart a healthy budgeting habit. After you are able to stick to this budget, you can customize it according to your unique expenses and goals.

50%

Half of your income, after tax, should be set aside for the essentials. This is basically universal and similar for most people. It includes housing, food, transportation and utility costs. 50 percent may seem like a big allotment but it makes sense since expenses in this area are necessities.

20%

20 percent of your income should be dedicated to savings. This should be a priority. It includes savings plans, debt payments as well as funds for rainy days. Others also include retirement in this area. It may seem funny to start so early but your future self will thank you for setting aside the funds. Save to buy stocks as well or use a part of this money to invest in different areas.

30%

The last priority in this budgeting rule is using 30 percent of your income for luxuries. These unnecessary expenses include items such as your mobile phone plan, cable bill and the daily coffee shop trips. This area also includes gym memberships, weekend trips as well as nights out with friends. The publication suggested that 30 percent should be the maximum amount that you should spend on these lifestyle expenses.

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