50/30/20 Rule: A Budgeting Guideline
September 30, 2013
At CU Money Sense, we strongly encourage students to create a budget (or a spending plan). A budget is essential to managing your money; it helps you to know where your money is going and keeps you responsible. However, there are many different ways to create a budget—this blog post will focus on the concept of the 50/20/30 Rule.
The 50/20/30 Rule is easy because it tells you where you should be spending your money across only three categories: Essential Expenses, Financial Priorities, and Lifestyle Choices.
1. Essential Expenses
According to the rule, no more than 50% of your take-home pay should go toward your essential expenses. These expenses include housing, utilities, transportation, and groceries.
2. Financial Priorities
Your financial priorities include debt repayments (credit cards, student loans), savings contributions, and retirement savings. Only 20% of your take-home pay should got towards these priorities.
3. Lifestyle Choices
Lifestyle choices can vary greatly and is often the easiest category to blow your budget. This category includes all of your discretionary spending, such as: hobbies, entertainment, travel, gym fees, personal care, eating out, shopping, etc. By allocating 30% of your income, you won’t have to worry or feel guilty about spending this money because it was already budgeted for after you took care of your essential expenses and your financial priorities.
How the 50/30/30 Rule Works in Real Life
Often times as a student, you’re dispersed your financial aid in one lump sum at the beginning of the semester—and that’s all you get. Being able to spread your money out over the semester is crucial for managing your budget. Confused on how to apply this rule to your life? Let’s take a look at a couple of examples:
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Does Renters Insurance Cover Flood Damage?
September 20, 2013
Insurance probably isn’t at the top of every college student’s list of concerns. However, with the recent flooding in Boulder, many students may be wondering about renter’s insurance and whether or not it covers damage caused by flooding.
The verdict: renter’s insurance does not cover flood damage.
According to www.homesite.com, “It’s important to note that while most renters’ policies will cover you for water damage caused by broken pipes or overflow, they do not cover you for flood damage. Flood and earthquake coverage must be purchased separately.”
Despite that it doesn’t cover floods or earthquake damage, renters insurance can be a great safety net for students. If your residence is destroyed by a fire or is broken into, renters insurance will cover all the property in your home including clothing, furniture, computers, electronics, and appliances. Most policies will cover up to at least $25,000 worth of personal property.
If you live off-campus and don’t have renters insurance, it’s definitely something you should consider. But keep in mind, if you live with roommates, only the insurance policy-holder will be protected. The premium (the monthly payment) for renters insurance is not very expensive (varies between $10-$30 per month) and can often be added to other insurance policies you might already have, such as car insurance.
For more information, visit the National Student Services, Inc. site or the National Association of Insurance Commissioner’s site about renters insurance for students.
If you’re a CU student that needs information on flood resources for victims, please visit http://www.colorado.edu/2013flood to find out how to get the help you need.
–Niomi Williams, Financial Literacy Educator
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4 Ideas to Trim Your Spending at CU
September 11, 2013
Looking for ways to trim your spending habits?
1.) Leave your car at home.
This will save you a car payment, car insurance, car maintenance, car registration, gas, tires, … you get the idea. Every student gets a Student Bus Pass which allows you to ride the bus for FREE (ok, it’s not really free – you pay for it every semester in mandatory fees so why not use it?) including the RTD skyRide route that goes to the airport (DIA). Students also have access to bus services to the mountains to ski and snowboard. (CU Ski Bus)
2.) Look for cheap and free entertainment.
Festivals, art shows, lectures, hikes. Check out the CU Events Calendar and Things to Do in Boulder to get started. Did you know there is an entire website dedicated Read more
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