Starting My Budgeting Journey: The 50/25/25 Method

By: Sydney Henry ‘24

College is expensive! And if you’re anything like me, you constantly find yourself broke because of it. I’ve decided to get serious about controlling my spending habits, so here is all that I have learned so far in my (very very) beginning stages of budgeting.

First up is evaluating your current money supply. Whether that be counting the cash in your piggy bank or logging onto your banking app to check your balance, make sure to write down all those values. This is so you can see where you started from and determine if you’re making good progress in the future.

For example, I personally — without revealing too much l information — have two different accounts that are used for different purposes. Both of my accounts are college student accounts, but my first account was originally a high school checking account that I upgraded to a college one, and the second is a checking and savings account connected, so I can transfer money between the two accounts how I would like. There are pros and cons to each but for now they work just right for me. 

Although having these accounts sounds all fine and dandy, unfortunately they really aren’t. My biggest problem when it comes to saving money is that I’m always transferring money from my savings to my checking account and not the other way around.

This is where self-discipline needs to make an appearance. In order to effectively save money, self-discipline is of the utmost importance. Without it, you’ll find yourself like me: spending and spending instead of saving and saving. 

So the question is: How exactly do you build self-discipline? It all starts with your budgeting (saving/spending plan).

Currently (aka the last month or so), I have been trying the 50/25/25 method. Originally, the 50/25/25 method designates 50% of your paycheck (weekly, biweekly, monthly, etc.) to your bills (rent, phone, car), 25% of your paycheck to your long-term savings account and the last 25% to leisurely spending (ordering out, shopping, etc.). 

You can watch this TikTok for a more detailed explanation.

I, however, take this concept and twist it to fit my specific situation. I am very fortunate to not have to pay bills like rent, a car note, and a phone bill. The main bills I pay for are my monthly subscriptions like Spotify, Disney+, Hulu, etc. So instead of the traditional 50/25/25 method, I designate 50% of my paycheck to my long-term savings, 25% to my bills (aka monthly subscriptions) and 25% to leisurely spending.

This breakdown also helps me to divide up which percentage goes where. For example, my paycheck (from working my on-campus job) directly deposits into my 1st checking account (the high school to college account). From there, I do the math to figure out how much is 50% and 25% of my paycheck. Then, since my savings and 2nd checking account are connected, I add up the amount equaling 50% with the amount equaling 25%, and schedule a transfer to the 2nd checking account using my banking app.

Example:

Paycheck = $400

400 x 0.5 = $200

400 x 0.25 = $100

Amount to Savings & 2nd Checking Account ($200 + $100) = $300

Amount Left in 1st Checking Account = $100

Then, when the transfer is complete, I separate that 50% + 25% to their respective accounts. So, based on the example above: $200 would go into my (long-term) savings account, and $100 would stay in that 2nd checking account.

It all sounds very confusing, but once you work it out either visually or mentally, it will start to make more sense. 

This again is only the start to my budgeting journey, and I would love to do a follow-up involving credit cards and/or how to eliminate certain costs per month.

Try this method out for the next couple of paychecks and let me know how it is working for you. As always, #FightOn!

Want more from Trojans 360?

Visit Trojans 360 on Facebook & Twitter to stay up to date with more student content! You can also Ask A Trojan an anonymous question, and we’ll try to answer it in a future post. And don’t forget to follow us on Instagram!

Trojans 360 is USC’s official student-run blog. Content created by students, for students.