‘My budget is 50% savings, 40% discretionary spending, 5% investments and 5% retirement’: I’m a college student with student loans and limited income. How can I manage my finances wisely for law school?

Hi Money Minder!

I’m a 2nd-year college student juggling grants, loans, and part-time work. I’ve got big plans for law school down the line. My budget right now looks like 50% savings, 40% for fun stuff like textbooks or extra expenses, 5% for Robinhood investments, and 5% for retirement. Can you give me some advice on this plan? I’ve also got around $739 a month, thanks to FAFSA refunds and my job. And yep, I’m a total newbie at investing, so I’m taking things slow until I get the hang of it. Oh, and I’m looking at graduating with about $22,000 in student loan debt. What do you think?

Thanks, Future Lawyer

Farewell, Future Lawyer

Response from THE MONEY MINDER:
Hello There,

Hello, and it’s great to hear about your commitment to your education and financial well-being. Considering your situation with a budget of 50% savings, 40% discretionary spending, 5% Robinhood investments, and 5% retirement, it sounds like a well-thought-out plan. It’s essential to focus on building a solid financial foundation, especially as you plan to go into law school in the future, and you are mindful of your student loan debt.

While your budget allocation seems reasonable, it’s important to regularly review and adjust it to ensure it aligns with your financial goals. Starting with savings and investing is commendable, but also consider building an emergency fund to cover unexpected expenses. Given your beginner investor status, it’s wise to continue learning and gaining confidence in investing before increasing that allocation significantly.

As for your student loans, aiming to graduate with $22k in debt for undergrad is manageable, but always explore ways to minimize this, such as scholarships, grants, or part-time work during school. Additionally, consider how your future law school expenses will impact your financial situation.

Remember, it’s crucial to strike a balance between your current financial responsibilities and planning for the future. Stay disciplined with your budget, seek out educational resources on investing, and don’t hesitate to seek advice from financial professionals. It’s great that you are taking a cautious approach as a beginner investor, and staying informed will serve you well in the long run.

Best wishes on your academic and financial journey,
THE MONEY MINDER.