What's the 50/30/20 rule and how does it work?

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings . The savings category also includes money you will need to realize your future goals.

What is the formula for financial freedom?

50-20-30 rules is an easy way to know how to achieve financial freedom in 5 years. Split the cash-in-hand into 3 equal parts as per the rule. 30% of income is spent on wants, 50% on needs, and 20% is set aside for savings and investments.

Is $4000 a good savings?

Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.

What is the 75 15 10 rule?

In his free webinar last week, Market Briefs CEO Jaspreet Singh alerted me to a variation: the popular 75-15-10 rule. Singh called it leading your money. This iteration calls for you to put 75% of after-tax income to daily expenses, 15% to investing and 10% to savings .

What are the 5 pillars of financial freedom?

The five pillars of financial planning— investments, income planning, insurance, tax planning, and estate planning — are a simple but comprehensive approach to financial planning.

What are the 3 building blocks of financial freedom?

The main aspects in achieving financial security is budgeting, reducing expenses, eliminating debt, and increasing savings . These four aspects are the building blocks to financial freedom and will help you kick-start your financial success.

What are the four pillars of financial freedom?

Are you financially healthy? Many financial experts agree that financial health includes four key components: Spend, Save, Borrow, and Plan . It is crucial that you actively work on improving the health of each one.

How do I create a financial freedom plan?

Building effective habits such as regularly budgeting, eliminating unnecessary expenses, setting a timeline for when you would like to attain financial freedom, and automating your savings deposits can all help foster a healthier relationship with your finances.

What is an example of the 50/20/30 rule?

Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500 . 20% to savings and debt repayment = $1,000 . 30% for wants and discretionary spending = $1,500 .

What is the disadvantage of the 50 30 20 rule?

It may not work for everyone . Depending on your income and expenses, the 50/30/20 rule may not be realistic for your individual financial situation. You may need to allocate a higher percentage to necessities or a lower percentage to wants in order to make ends meet. It doesn't account for irregular expenses.

When should you not use the 50 30 20 rule?

For example, if you live in a high-cost area, you may have to put a large part of your income toward housing, making it difficult to keep your needs under 50%. So, you may need to adjust the percentages to fit your situation. The categories also may or may not work for you.

What are the flaws of the 50 30 20 rule?

Disadvantages of the 50/30/20 Budget Many people find it hard to allocate 20% of their income toward savings . If you live in a large metropolitan area with a high cost of living, it may be difficult or impossible to include all your needs with only 50% of your income.

Blog — Sisters for Financial Independence (2024)

Aug 18

Aug 18 The College Series - Back-to-School Prep with Financial Independence in Mind

Elaine Gamolo

College Series

"An investment in knowledge pays the best interest."

August is mainly just dreading the fact that school is coming and there’s nothing you can do about it. It’s the Sunday of summer
— College Student (@ColIegeStudent) August 1, 2018

It’s that time of year...the Sunday of Summer. In the blink of an eye, your days of vacationing, interning, or working elsewhere become days of mental and physical preparations for back to school. August rears its head a lot faster than expected and you scramble to pack for move-in or buy books for classes. Across the country, students just like you are trying their best to get through back to school season and trying not to break the bank (or your parents’). Broke college students seem to be the norm, but it doesn’t have to be that way. Whether you already started classes or will begin in September, here are some helpful tips to get you in the money-saving mindset for back to school!

This post contains affiliate links. See Disclosures for details.

Back To School Sales

Take advantage of Back to School sales going on at your favorite stores. Don’t forget to bring your student ID with you because many stores offer discounts to students, as well. This goes for clothes, dorm essentials, school supplies, and toiletries. Additionally, take advantage of your .edu email address for discounted/student versions of programs and subscriptions.

Here are some services to consider with student discounts, but find a full list over a myunidays.com and get to saving. Remember, it all adds up in the end so shop wisely and take advantage.

Amazon Prime for Students (or piggyback off of your parents since it allows multiple family members. - 6-month free trial, then $59 a year.
Apple - checkout student discounts at Apple
Asos - get 10% off on new style
Levi's - get 15% off on new style
Spotify for Students - $4.99 a month and now with Hulu
Squarespace for Students - 50% off first full year

Become a DIY Queen

Summer break is a great time to become the DIY queen that you’ve always wanted to be. Pinterest and YouTube are full of endless possibilities when it comes to room and closet ideas. You can buy things new, go to your local thrift store, or DIY. Achieving that Tumblr aesthetic or boho chic vibe from Urban Outfitters on a budget is a lot easier than you might think. Be aware of your own school’s resident hall policies. Don't waste money on buying things you aren't allowed to have (some schools ban Christmas/fair lights, tapestries, and candles) as a safety precaution. Sometimes you can get away with them, but always be wary, otherwise you’re at risk for a hefty reslife or fire marshall fee.

Evaluate Your Closet

Donate, Repair, Discard piles. Donate clothes you haven’t touched in years. That free shirt you won on the school green is taking up space in your closet! Ask your friends if they want any of your clothes. Maybe your roommate has raided your closet in the past, but now she can take things without the guilt. Join swap groups on Facebook. They can be a great place to sell or by brand name items in your closet. I’m part of a sorority, so I happen to be in some sorority swap groups.

Other services to check out:

Poshmark for buying/selling clothes.

ThredUp for buying secondhand clothes.

eBay for buying/selling clothes and other items.

Sell Those Books

While you may be dreading getting any school-related emails over the summer, it’s sometimes worth having your syllabus sent to you weeks in advance. Check ratemyprofessor.com or talk to upperclassmen that took the class to see if you really need the book. If you know for sure that you need certain text books, keep track of rental prices over the summer. Don’t rent too early if that means you have to return your books before finals start. Sell back your books to online book retailers or find an underclassmen or friend to sell it to.

In reality, you'll probably never open half those books. Sell them before they become obsolete and gain back some of your money. It'll also be one less thing that you'll have to move or lug around.

Pay Off Student Loans Interest

Pay off the interest off your student loans every month (at the very least!). Pay off more if you can. You might not realize how much student loan debt will affect you until you're older. Don't let it be the bane of your existence. Evaluate your loans and the interests on them. Understand the differences between private and federal loans you may have.

File the FAFSA

May ur GPA respect you.
Don't let ur bank account neglect you.
Angels protect you.
FAFSA accept you.
— College Student (@ColIegeStudent) July 14, 2018

File your FAFSA on time. The last thing you want is for your financial package to be incorrect or nonexistent when your tuition is due. Be aware of any pertinent due dates regarding your FAFSA or school’s Financial Aid and Bursar deadlines.

Scholarships

Scholarships are for everyone. There are scholarships for people of all majors, backgrounds, year level, so take some time out of your week to research and apply for scholarships consistently. Sure, essays and applications are a drag, but it'll be worth if it you happen to snag some extra cash.

Figure out a system with scholarships. Keep information handy so that you can just copy and paste. Scholarships can be a pain because they ask the same information, don't be afraid to create a system to make filling them out easier. Reuse and repurpose essays if you need to and as long as it is allowed.

Work On Campus

See if you can work on or around campus. Your school may offer a lot of job opportunities ranging from school store employee, phoneathon caller, desk attendant, and administrative assistant. If you can't work on campus, see what local businesses are in your area. I know a lot of people that ended up working at local bars and restaurants a few blocks away from school. Check your school’s Career Development Services, or similar, for job listings.

Don't discount starting your own side hustle too. This is a great way to learn something new and share your skills. If you are good in tech, perhaps you can help small businesses set up IT systems or even just setup someone's computer. Savvy with social media, reach out to local businesses and help them start up a social media presence. Side hustles don't have to be big and they certainly don't have to be perfect.

On Campus vs. Commuting

If you can, try not to dorm. If you want the dorming experience, definitely try it your first year, but if you are living within the means of your school, try commuting one semester or for the rest of your time in school. Gauge if the money spent on rooming is worth the stresses of commuting every day. Obviously this isn't an option for everyone, but it's something to consider.

If you have to happen to live far from your school, evaluate your living options off-campus. There may be apartments or student housing close to your school that may be cheaper. You would have to take more responsibility living off-campus, but the price might be worth it. So gather a couple of your friends and make some arrangements.

Evaluate Your Meal Plan

Meal plans are usually a requirement for first years. I guess they don't want you to starve without mom or dad around, but after that, re-evaluate and see if you really need your college meal plan? After your first or second semester, you’ll probably come to terms with whether or not your dining hall is worth paying thousands of dollars for. Downsize your meal plan or get rid of it all together. This does require that you learn to cook so figure out some basic meals to make that are delicious so you don't resort to take-out all of the time. Sorry Grubhub!

Blog — Sisters for Financial Independence (2)

Car on Campus

Evaluate if you really need your car on campus. Some schools have astronomical on-campus parking fees. If you can walk around or use public transportation primarily in your college neighborhood, you might not need a car. But always befriend someone at school that does. ;) Your school may even offer a shuttle service to local spots outside of your campus, like grocery stores, the mall, and downtown areas. Don't forget to take advantage of student discounts on public transportation.

What to do with the Savings

Now that you are saving all of this money, don't throw this money away. Figure out how to save it, pay off student loans or invest it. The best thing to do is to create an online savings account to funnel your saved money to so that you don't end up spending it. I personally use CapitalOne 360 to do this because it allows me to create multiple savings accounts for free and it's harder for me to access the money. Remember that any money saved today can buy time tomorrow so re-think how you spend. I get it, I'm there with you, living my best life on campus, but I'm in my last year of college and I want to have some money saved up.

Blog — Sisters for Financial Independence (3)

Scott Webb