Master Your Money: A Practical Guide to the 60/30/10 Rule Budget

60/30/10 rule budget

If you’re on the hunt for a budgeting method that’s easy to grasp and put into action: the 60/30/10 rule budget might just be what you need. This simple rule allocates your after-tax income into three pots:

  • 60% for growing your savings and reducing debt,
  • 30% for your living essentials,
  • 10% to enjoy the little extras in life.

Our article breaks down how to navigate this budgeting strategy for financial peace of mind.

Understanding the 60/30/10 Rule Budget

The 60 30 10 rule budget is a simple yet powerful financial tool. It divides your after-tax income into three categories: 60% for savings and debt repayment, 30% for essential living expenses, and 10% for personal spending or ‘fun money’. This budgeting method promotes financial stability. The goal is achieved by helping you manage your money effectively, avoid overspending on non-essentials, and prioritize your financial goals.

Plus, it offers the flexibility to adjust allocations based on changes in your income and expenses. This allows you to tailor your college savings plan to your individual financial situation and lifestyle preferences.

The 60%: Savings and Debt Repayment

The first category in the 60 30 10 rule budget is savings and debt repayment, which like the name suggests, should make up 60% of your net income. This allocation is designed to enhance your saving and investment rates significantly, ensuring financial growth and stability. It includes:

  • Contributions to an emergency fund
  • Retirement accounts such as 401k
  • College savings plans
  • Other investments
  • Paying off high-interest debt

By dedicating a substantial part of your income to savings and debt repayment, you accelerate the development of a financial safety net and make progress towards your long-term financial goals. Achieving financial freedom becomes more feasible as automating savings and debt repayment.

The 30%: Essential Living Expenses

Next, 30% of your income should be allocated for essential living expenses, including:

  • Housing
  • Utilities
  • Groceries
  • Transportation

By focusing on these essentials, you can better manage your non essential expenses and maintain a balanced budget.

In addition to insurance premiums, this category encompasses copays and out-of-pocket expenses for medical care, all of which fall under healthcare costs.

It’s crucial to manage these essential needs and keep them under 30% of your income. Ensure these living expenses are affordable, and you’re not living beyond your means. This allotment ensures that your necessities like housing (rent or mortgage payments) and utilities are covered within your budget constraints. Remember, the goal here is financial stability, not stress.

The 10%: Personal Spending and Fun Money

Finally, the remaining 10% of your income is your fun money, designated for discretionary expenses, including more money for:

  • entertainment
  • dining out
  • hobbies
  • travel
  • clothing

This allocation allows you to enjoy life’s pleasures without derailing your budget, making the 60 30 10 rule budget a sustainable and enjoyable way to manage your money.

However, keeping discretionary expenses within this 10% allocation is crucial to prevent overspending, which can disrupt your overall financial goals. One practical method to control this spending is to use cash for wants. It is an excellent way to provide a tangible way to monitor expenses and maintain budget discipline. You could also set up personal rewards for adhering to the 10% limit, which can be motivating and prevent budget fatigue.

How to Implement the 60/30/10 Rule Budget in Three Steps

Now that you understand what the 60 /30/10 rule budget is: How do you go about implementing it in your life? It involves a few key steps:

  1. Calculating your after-tax income
  2. Allocating funds according to the rule
  3. Tracking your expenses and adjusting your budget as needed.

1. Calculate Your After-Tax Income

To implement the 60 30 10 rule budget, start by calculating your monthly after-tax income. This will serve as the first step in creating an effective budgeting plan. This is the amount of money you take home after all taxes have been deducted from your earnings. It should include all forms of money received after taxes have been deducted, covering:

  • regular job income
  • side jobs
  • contract work
  • child support
  • stimulus payments
  • income from apps or other sources

Once you know your after-tax income, you can calculate how much to allocate to each category in the 60 30 10 rule. Simply multiply your net income by 0.6 for savings and debt repayment, 0.3 for essential expenses, and 0.1 for personal spending and fun money.

2. Create a Budget Spreadsheet or Use an App

Once you’ve calculated your after-tax income and determined your budget allocations, the next step is to track your expenses. One way to do this is by creating a budget spreadsheet. Start by listing your recurring expenses in each category: savings/debt repayment, needs, and wants. You can design a budget template to track your expenses and ensure adherence to the 60-30-10 budget allocations.

Also, consider including a dedicated column or category in your budget spreadsheet to track variable expenses that may change month to month, such as utility bills or groceries. If you’re not a fan of spreadsheets, you can use a budgeting app. These apps can simplify the expense tracking process and help maintain the discipline required for the 60-30-10 rule.

3. Monitor Your Spending and Adjust as Needed

Just setting up a budget isn’t enough, though. To ensure you’re sticking to the 60 30 10 rule, you’ll need to:

  1. Monitor your spending
  2. Adjust your budget as necessary
  3. Adopt a monthly review process to evaluate and adjust the accuracy of your budget categories in line with your financial goals.

Budgeting tools that automatically categorize expenses can help you track your spending effectively and identify discrepancies. Be proactive in managing costs within your budget categories, such as scrutinizing healthcare and transportation expenses to prevent overspending. Also, carefully monitor your discretionary spending category to ensure it doesn’t exceed the designated 10% of the budget.

Understanding the need for adjustments in your spending habits is crucial to staying within your budget limits and saving adequately. Finally, don’t be afraid to make necessary adjustments by reallocating funds among your categories when necessary to save money and stay true to the 60 30 10 budget structure.

Pros and Cons of the 60/30/10 Rule Budget

Like any financial strategy, the 60 30 10 rule budget has its pros and cons. Its effectiveness can be highly dependent on your take-home pay and expenses, and it might not be suitable for everyone.


The 60/30/10 rule budget is advantageous because of its simplicity. It is easy to understand and implement, making it a popular budgeting method. It’s easy to implement and requires only the categorization of expenses and adherence to set budgets, which greatly eases the budgeting process.

Moreover, the 60/30/10 rule budget can accelerate your path to reaching financial goals such as debt repayment or wealth building. It encourages saving for short-term and long-term objectives and helps you get out of debt or accumulate wealth faster. This budgeting method also facilitates disciplined financial management and spending, increases the focus on growing income, motivates saving maximization, and sets clear spending priorities.

Following the 60 30 10 rule offers financial clarity and contributes to long-term financial stability by prioritizing expenses and future savings, in turn reducing financial stress. Plus, it allows for a tangible sense of accomplishment by providing a clear framework to measure financial progress.


On the flip side, the 60/30/10 rule budget may not be realistic for individuals with lower incomes or who live paycheck to paycheck, making adherence to the set percentages challenging. Individuals with lower income may find the 60 30 10 rule’s emphasis on high savings too extreme and may need to alter the percentages or increase their income to comply.

A high cost of living can significantly hamper the ability to allocate only 30% of income to necessities under the 60/30/10 rule budget. Adhering to the 60 30 10 budgeting rule may necessitate considerable lifestyle changes or downsizing of living expenses for those accustomed to higher living standards. The structured approach of the 60 30 10 rule can feel overly restrictive, limiting spontaneous financial decisions and adaptation to changes.

Additionally, due to inflation and the necessity for a low-cost lifestyle, the 60 30 10 rule might not be sustainable for those without a substantial income. The commitment to save a large portion of income as dictated by the 60 30 10 rule poses a significant challenge for those used to higher discretionary spending. Those requiring a balanced approach that better accommodates immediate needs may find alternative percentage-based budgets such as the 50/30/20 rule more suitable.

Adapting the 60/30/10 Rule Budget to Your Unique Financial Situation

The 60/30/10 rule budget isn’t a one-size-fits-all solution. It may need to be adapted to your unique financial situation and goals, which might require lifestyle adjustments to fit the budget’s allocation for essential needs.

Adjusting Percentages

If your essential needs exceed 30% of your income, you might need to adjust the 60 30 10 budget. This indicates that the allocated percentages for needs, savings, and wants do not fit your financial situation. For instance, if you’re living paycheck-to-paycheck, you might need to invert or otherwise modify the 60 30 10 rule to allocate a higher percentage to needs and less to savings or wants.

The 60 30 10 rule also presumes a consistent income, which might not be the reality for freelancers or gig economy workers. If this is the case, you might need to adjust the budget to fit your income patterns. For instance, individuals with variable incomes may adjust the rule by creating a baseline budget on their lowest expected monthly income. Then, during better earning months, you can direct surplus funds towards enhancing your savings or accelerating debt repayment.

The 60 30 10 rule is designed to be flexible, allowing for modification of budget percentages as your income and expenses evolve over time. As your saving habits strengthen, you could begin with a different budgeting strategy, such as the 70-20-10 or 50/30/20 budget, and then gradually shift towards the 60 30 10 rule.

Incorporating Other Financial Strategies

The 60 30 10 rule can also be adapted to encompass other financial goals. For instance, you might want to build an emergency fund, start investing, or accelerate your debt repayment. These goals can be tailored to your individual long-term financial objectives and incorporated into the 60 30 10 rule.

For instance, if you’re working towards becoming debt-free, you could integrate the debt snowball method with the 60 30 10 rule. In this case, a portion of the 60% allocated to savings and debt repayment can be directed to paying off debts from the smallest to the largest balance. This provides motivation through the quick wins of eliminating smaller debts.


In summary, the 60/30/10 rule budget is an effective and flexible budgeting tool that can help you manage your money effectively, prioritize your financial goals, and achieve long-term financial stability. While it may have its challenges and may not be suitable for everyone, it’s adaptable and can be adjusted to fit your unique financial situation. By implementing this rule and adjusting it as necessary, you can create a budget that suits your needs, helps you achieve your financial goals, and allows you to enjoy life while maintaining fiscal responsibility. Remember, the path to financial freedom starts with a plan – and the 60 30 10 rule could be the starting point you need.

Frequently Asked Questions

What is the 70 20 10 budget rule?

The 70 20 10 budget rule recommends allocating 70% for living expenses, 20% for savings and debt, and 10% for additional savings or donations, providing a clear system for managing your money. This budgeting approach can lead to greater financial control and wellbeing.

What is the 60 20 20 rule for budgeting?

The 60/20/20 rule for budgeting suggests allocating 60% of your income to living expenses, 20% to savings, and 20% to personal wants. This approach provides a clear framework for managing your finances effectively.

What is the 50 20 30 rule of budgeting and saving?

The 50-30-20 rule suggests allocating 50% of your income to needs, 30% to wants, and 20% to savings, helping you budget and save effectively.

How do I implement the 60 30 10 rule budget?

To implement the 60 30 10 rule budget, start by calculating your after-tax income, allocate funds according to the rule, track your expenses, and make adjustments as needed. This will help you effectively manage your finances and achieve your financial goals.

Who is the 60 30 10 rule budget suitable for?

The 60 30 10 rule budget is suitable for individuals with a stable income that comfortably covers their essential needs and leaves room for savings and discretionary spending. It might not be ideal for individuals with lower incomes or high living costs.