Know Where Your Money is Going: Tips for Budgeting as a College Student

By Erin Kenney

Working as a lifeguard at a summer camp, University of Georgia junior Emma Duncan started to worry about her money. She was spending more than she was making, and she needed her tiny paychecks to buy food through the summer months, she said. 

It was then the social work major said she started paying close attention to her finances and developing a budget.

Now living in off-campus housing for the first time, Duncan’s budgeting practices have helped her keep track of everything from utility bills to grocery expenses. She tracks her expenses with pen and paper, jotting down expenses from her bank statement in her planner, she said. 

For many students like Duncan, college is the first time they have authority over their finances, said Davis Bradley, a financial representative with Northwestern Mutual. He said college is a crucial time for young adults to develop financial maturity and establishing a budget can help create this foundation. 

“Having a sense of budgeting is really crucial in terms of just establishing good habits early on in your life and just really developing financial maturity,” Bradley said.

While Duncan prefers to keep an eye on her expenses using pen and paper, there are a variety of ways to budget, from using apps like Intuit’s Mint to Excel spreadsheets. But how a person chooses to track their budgeting isn’t as important as the ground rules they make for themselves as part of their budgeting plan, Bradley said. 

For many students budgeting for the first time, Bradley said it can be difficult to know where to begin. 

He recommends the 20-60-20 rule for budgeting, where the earner saves 20% of their paycheck, uses 60% to pay set expenses like rent and utilities and uses the final 20% as discretionary spending. Also commonly called the 60-20-20 rule, Bradley uses the 20-60-20 ordering to represent reverse budgeting. Reverse budgeting, he said, is when earners save first, paying themselves before taking care of other expenses. 

Reverse budgeting can be more gratifying for many people, Bradley said, because once the first 20% of a paycheck is saved, the rest is spendable. Earners can automate their paychecks to direct deposit 20% of the total into savings, and then they don’t have to worry about saving money after taking care of other expenses. This can help reduce stress and allow earners to still feel like they can maintain a fun lifestyle, Bradley said.

Maintaining her college lifestyle has been a key part of Duncan’s budgeting plan, she said. Even though she focuses on saving money, she still goes out with her friends and enjoys dining out. Her savings allow her to enjoy these experiences without anxiety, she said.

“If somebody’s starting to budget and trying to decide what kind of things to prioritize, definitely prioritize the time you spend with your friends over other things,” Duncan said.

Once college students get a handle on budgeting, there are other financial best practices they can work on to grow their financial maturity, Bradley said.

Living below your means and avoiding credit card debt are examples of behaviors college students can practice creating a strong foundation for their financial habits, he said. 

Once students master a budget, using the money they’re saving to invest is a great next step, Bradley said.

“Budget something in your college years for an investment,” he said. “Starting that while you’re young as part of your budget will be really huge and beneficial for your future.”

Erin Kenney is a journalism student at the University of Georgia.

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