The 60 30 10 Rule Budget Explained & How To Use It

Last Updated March 24, 2024 by Davina Kelly

If you are looking for a system to help you plan for the future and build wealth the 60 30 10 rule budget is perfect for you. 

This budget method gives you an easy framework to help you manage your finances, work on your long-term goals, meet your essential needs and still do the things you enjoy.

This is the exact approach I took to help me stop overspending, pay off debt, save more money and build an investment portfolio.

In this post, you are going to learn what the 60 30 10 rule budget is, how it can benefit you and how to put your own budget together. 

After reading this post, you will be able to work towards your financial goals and take care of your essential expenses while still making room for fun.

This post is all about the 60 30 10 rule budget.

What Is The 60 30 10 Rule Budget?

Before we get into this post, let’s define what the 60 30 10 rule budget is. This is a budget plan that allocates a percentage of your take-home pay into three categories which are represented by the numbers.

• 60% of your net income will go towards savings, investing, or paying off debt.
• 30% of your budget is allocated to your needs. These include costs like housing, food and transportation. 
• The final 10% of your income goes towards your wants. This is your fun money and can include things like dinner with friends or a spa day.

Who Is The 60 30 10 Rule Budget For?

You might be wondering who is this budget ideal for especially after seeing how the percentages are allocated. This budget is best suited for people who want to prioritise working towards their long-term financial goals. 

For example, if you want to save up for a property saving 60% of your income will help you get there faster. Or if you want to pay off debt this budget method provides a structured method to achieve your goal while still taking care of your wants and needs.

This budget is also ideal for you if you want to find a balance between working towards your goals and enjoying discretionary spending. You shouldn’t have to feel deprived when sticking to your budget. Your budget is a tool to help you optimise your money while still enjoying the fruits of your labour.

Benefits Of The 60 30 10 Rule Budget:

Prioritise Your Financial Goals

The biggest benefit of the 60 30 10 rule budget is that you can reach your financial goals faster. Whether you want to start investing your money, pay off debt or build an emergency fund following this budget split will help you accelerate your timeline. 

Helps To Avoid Overspending

When you have a set amount of money to spend you are more likely to be mindful of how you spend it. Spending within a budget will encourage you to make smart spending choices, avoid impulse purchases and stop spending money on unnecessary things. 

Easy To Implement

Another benefit of this budget rule is its simplicity. Unlike other budget methods that require you to track your expenses in detail, this budget provides a straightforward guideline for allocating your income. All you have to do is divide your take-home pay into three categories based on the percentages and stick to it every month. It’s that easy! 

When you know exactly how much money you have to spend on your goals, necessities and wants it is easy to manage your money without feeling overwhelmed.

Provides Balance

This budget also strikes a balance between prioritising your goals, and essential expenses and spending money on the things you enjoy. 

While the biggest chunk of your budget is allocated to your future and necessities like housing, utilities and grocery costs it also allows room for non-essential purchases. 

Budgets are supposed to be a tool to help you reach your goals. It shouldn’t make you feel overwhelmed or ashamed because you enjoy spending money on eating at nice restaurants instead of cooking at home every day! This balanced approach will allow you to be disciplined while still doing things that bring you joy and fulfilment in life. 

How To Put Your Own 60 30 10 Rule Budget Together:

Step 1. Establish Your Monthly Take-home Pay

As with any budget, the first step is determining your income. Your income is the foundation of your budget and will dictate how much money you have to allocate to each category of your budget. 

If you are paid a salary you need to look at the money you earn after tax. You can check your bank statement or a payslip if you are not sure. 

Ensure that you also include any money you make from your side hustles, freelance work or other sources of income. I know that this type of income can fluctuate so you can just use an average. 

Step 2. Choose a Financial Goal To Work On

Now that you have determined your income, the next step in implementing the 60 30 10 rule budget is to choose which financial goal you want to work on and allocate 60% to it. 

For example, if your take-home pay is $2,500 you will allocate $1,500 to your goal. 

Now, it is entirely up to you which goal you focus on. Take some time to think about which goal is important to you and aligns with your financial future.

You may have a lot of consumer debt that you want to pay off so that you can free up money in your budget to save. Or you may want to start investing your money so that you can make your money grow and build wealth. Both goals are good, but the choice you make should be based on your unique situation.

Another option is to choose two goals and work on them simultaneously. For example, if you want to build an emergency fund and start investing you can allocate 30% to each goal.

This is the method I chose when I began working on my money goals. I wanted to build up my savings and grow my money so I did both at the same time. I was able to do this because I had cultivated discipline in managing my finances. So if you are new to budgeting and want to keep things super simple then just allocate 60% to one goal.

Step 3. Allocate 30% To Essential Expenses

The next step is to allocate 30% of your budget to your essential expenses. 

This will include expenses like

• Housing costs: Rent or mortgage payments, home insurance
• Utilities: Gas, electricity, water, phone bill, internet services etc
• Food: Weekly groceries 
• Transportation: Monthly car payments, car insurance and public transport 
• Healthcare: Insurance, dental, any prescriptions etc
• Debt payments: Any minimum debt payments you need to make for credit cards or a loan

Since this category takes up 30% of your income you need to be honest about whether something is a want or a need and make some adjustments.

For example, if your phone contract is up for renewal do you need to upgrade to the latest iPhone or can you switch to a sim-only contract and keep using your current phone? Doing this can save you a lot of money.

This is the approach I took when I was looking for ways to cut back on my expenses. I used to pay $60 a month for my phone contract then I switched to a sim-only contract which saved me $480 a year!  Having the latest phone is cool but it isn’t always necessary, the older phone will work just as fine. 

I have included a free printable you can use to put your budget together. It also comes with an expense tracker so you can keep track of your outgoings and easily see where you can cut back. 

Step 4. Use The Last 10% For Fun

The final step in putting your budget together is allocating 10% of your income to spend on fun. You have the freedom to spend money on anything you want!

This can include things like

• Dinner out with friends
• Coffee
• Theatre tickets
• Online shopping
• Beauty treatments

It is important to treat yourself so don’t hold back here. Go ahead and plan a girl’s night out with your friends or book a massage do whatever is fun for you. 

Having room to allocate a portion of your money to fun is essential for maintaining balance and preventing you from feeling restricted. 

Although you are budgeting for fun it is still only 10% of your budget so you should choose experiences and activities that align with your interests and values. 

Whether you choose to treat yourself to a nice meal, attend a concert or pursue a hobby, use this portion of your budget to enhance the quality of your life and prioritise your happiness and well-being. 

You can also consider ways to do the things you enjoy within a budget. For example, if you want to have a spa day look on websites like last minute for deals. This way you can have fun and save some money.  

Step 5. Review Your Budget Regularly

Once you have put your budget together it is important to review your finances regularly to ensure it is working and that you are staying on track. 

Reviewing your budget regularly will allow you to assess your spending habits, track your progress towards your goals and make any necessary adjustments. 

You can keep this simple, just set aside 30 minutes once a month to review your budget and compare your actual expenses to your budgeted amounts. 

If there are any areas where you have overspent adjust accordingly to maintain balance and stay on track with your goals. You can do this using the free budget tracker I have provided in this post. 

This is an extra step but I do recommend it to make the most out of your budget and gain valuable insights into your spending habits.

Is The 60 30 10 Rule Budget Right For Me?

The 60 30 10 rule budget is the perfect choice for anyone who wants to improve their money management and prioritise their financial future. But you should assess your current situation before making a choice. 

Although this budget offers a simple and effective approach to managing your finances it may not be suited for everyone. So before diving in I recommend taking some time to determine if this approach aligns with your goals, needs and lifestyle.

If you don’t make a lot of money this budget may seem a bit intimidating at first. So you may want to consider looking at ways to make extra money before getting started.

Or if you are someone who tends to spend a lot on discretionary items or you struggle to stick to a budget this approach may seem a bit extreme. This budget method will help to provide structure and discipline in managing your finances. 

However, it is important to be honest with yourself about your spending habits and make adjustments as needed to ensure that your budget aligns with your goals.

Ultimately, the suitability of this budget depends on your individual circumstances, preferences and goals. 

Whether you are new to budgeting or a seasoned budgeter looking for a flexible framework to guide you, this budget can serve as a valuable tool in achieving financial security and planning for the future. 

Frequently Asked Questions About The 60 30 10 Rule Budget

Below are answers to the most commonly asked questions about the 60 30 10 rule budget.

What Is The 60 30 10 Rule Of Investing?

The 60 30 10 rule budget is a method where you allocate 60% of your budget to your financial goals, 30% to your essential expenses and 10% to wants. 

This method prioritises your long-term financial goals like investing, saving or paying off debt. By following this approach you will focus on putting most of your income in the stock market which will allow your money to increase in value from growth and compound interest. Investing is a great way to grow your money, plan for retirement and build wealth.

What Is The 70 20 10 Budget Rule?

The 70 20 10 rule budget is similar to the 60 30 10 rule budget in that it is a simple way to allocate your income to categories in your budget.

It is split into three categories

• 70% for living expenses
• 20% for savings and debt
• The remaining 10% goes towards additional savings and donations

If you are someone who has high living expenses this budget split will work well for you. But if you want to prioritise your financial goals this budget split isn’t ideal, in that case, you should stick with the 60 30 10 rule budget split.

Final Thoughts

The 60 30 10 rule budget offers a straightforward and effective approach to managing your finances, prioritising essential needs and saving for the future while still making room for fun.

By establishing clear allocations for each category you can achieve balance, discipline and fulfilment in your financial journey. Whether you are new to budgeting or looking for ways to optimise your budget this method is a sustainable way to achieve your financial aspirations.

I hope you have found this post helpful and can now put your budget together and start working towards your financial goals. Is this budget split ideal for you? Let me know in the comments below. 

This post was all about the 60 30 10 rule budget.

Other Posts You May Like:

Budgeting 101: A Simple Guide To Upgrade Your Finances

15 Easy Money Management Tips For Beginners (Improve Your Finances)

Minimalist Budget: 10 Easy Steps To Simplify Your Finances & Save Money!