Written by Sian Salazar | September 20, 2024
Find Part One (on living alone) here!
So you’ve just gotten your first paycheck and you have no idea what to do with it. Let me help you figure that out.
Obviously, for each student, their financial situation is different. What you do with your internship money depends on if your housing is paid for (by the school, your internship, your parents, etc.) and how you get your groceries (Are you on a meal plan? Are you on EBT?). For me, I was not EBT-eligible while I held my internship position, and I was lucky enough to have my housing paid for through various programs at USC (if you need help finding this type of money, check out my post on finding funding for internships here). Thus, I needed money for groceries, leisure, and everyday necessities, but I did not need to put money down for rent each month.
A general rule of thumb is that your rent should be no more than ⅓ your monthly income. As college students whose spending is typically very different from a working adult (for example we have no cars and no car insurance), this general rule can look very different — but if you’re putting the majority of your paycheck down on your rent, budgeting what’s left can be very difficult.
I like to be strict with my money. I do this by creating and religiously maintaining a spreadsheet for each month. I set a budget, depending on what my needs for the month are, and I will do everything in my power to live by that budget. Unfortunately, sometimes this means saying no to dinner invitations, or resisting the urge to have my third sweet treat of the week (if you know, you know).
However, I will also be realistic with what I need. If I’m moving into a new space for the summer, my budget needs to be higher than if I’m already settled in. For example, last year I moved into a place with no lighting — therefore, I had to factor lamps and lightbulbs into my monthly budget, which is obviously not a normal expense for me. Quarterly purchases like shampoo and conditioner, toothpaste and body soap, that are necessary but are not made frequently can also be forgotten about and can make you feel like you’re going way over budget when you’re not.
My advice: Think about what you really need, and what you really want — and don’t confuse one for the other. Make your budget based off this, and if you find you went over or under budget your first month, use this information to recalibrate and readjust for the next month. Consistently setting a low budget but never sticking to it isn’t going to help you — be realistic and honest with yourself. You can raise your budget if you need to. However, don’t be overly generous with it. If you find yourself raising your budget because you simply can’t give up your daily matcha, my words of advice to you are this: Give up the matcha! You can make it at home for significantly less, and once you become good at it you’ll never want to leave your little home café again. Like I said earlier, sometimes sacrifices are necessary. But only you can be honest with yourself about what is necessary and what is not.
Additionally, if you have the room in your paycheck for it, start thinking about saving money. Make a high yield savings account and dump all the money you’re not using for monthly expenses there, where it can earn interest. Be smart with your money and utilize it wisely. If your money can grow by just sitting around, why not do that? An extra $5-10 a month certainly never hurt anyone (though keep in mind, this is technically taxable income).
If you don’t want to make another bank account, try to set aside a minimum amount to keep in your checking account at all times. If you never dip below $100 or $200, you’ll have that money in case of emergencies, or just unexpected purchases (like me and my lamps last summer).
Best of luck and happy budgeting!