What is the 30-30-30-10 Budget Rule? And How Does it Work?

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The 30 30 30 10 budget is a simple method to guide you in how to budget and spend (or not spend) your money.

It helps you manage your money. You can know how much to save, how much to spend, and how much to use on debt.

The 30 30-30-10 budget offers a percentage-based way to calculate how and where you should spend your money:

• 30% should be spent on housing expenses
• 30% should be budgeted to needs and necessities like food an utility bills
• 30% should be spent on financial goals, debt payments and savings
• 10% should be spent on your wants, or fun money

Why Use the 30 30 30 10 Budget?

Do you really need to budget?

Yes! Absolutely yes. Budgeting your money will help you improve your finances and your future.

It can keep you from getting into debt. Debt is the most damaging thing you can do to your financial life. And, once you have it, it can be so hard to get out of it.

Sticking to a budget gives you more control and helps you have a path and a way to stay on track.

There are actually a lot of guides out there, you may have already heard of the 50/30/20 budget rule.

But, you could also try the 30 30 30 rule. 30 30 30 10 gives you a simple plan and way to manage your spending. You just need to get started!

What is the 30-30-30-10 Budget Method?

This rule of budgeting is percentage-based. 30 30 30 10 includes 4 categories.

These categories are what you will place your monthly income (take-home pay) into and how your will organize your spending. The categories are Housing, Needs, Goals and Wants.

And, the numbers in the rule, are actually designated percentages. So the “30” in the rule equals 30% and the percentage is the amount of your pay that you will spend on each category.

Need help saving money? Try the 365 day nickel challenge.

Here are the four 30/30/30/10 spending categories:

30% for Housing

According to the 30-30-30-10 rule, 30% of your monthly income should go to your housing expenses.

That includes your mortgage payment or rent, property taxes, homeowner’s insurance and even maintenance costs.

Examples of housing costs:

• Rent
• Mortgage payment
• Property taxes
• Upkeep on your house

If you find that your house expenses are already over the 30%, you may want to consider downsizing. You could move to a smaller, less expensive place.

Or, you could rent out an extra room and reduce hour housing costs that way.

30% for Necessities

The first 30 of this budgeting system is for your necessities. This includes anything you have to have, like food, utilities, healthcare and car insurance. Here is an in-depth list of examples of needs and wants.

Examples of Needs:

• Monthly utility bills
• Car insurance
• Car payments
• Health insurance
• Loan payments
• Groceries

Try this list of cheapest foods and groceries to buy to help cut down your spend on the needs category.

30% for Financial Goals & Savings

Now this is one reason why I like the 30 30 30 rule! Not all budgeting rules include something like “goals.”

This 30 can also be used for your savings goals so you can make sure you have an emergency fund.

But in this budgeting method, you need to allocate 30% of your income to your financial goals. You can also use this category for debt repayment.

You can set up multiple goals for your savings with different sinking fund categories like these. And you can also help yourself keep track of things with a cash envelope system.

We don’t often think about our financial goals, but they can be so important for your money health and your future.

And of course making sure you are saving for retirement and have money for emergencies is crucial.

More reading:

• Why Can’t I Save Money?
• A Penny Saved is a Penny Earned

Financial goals can include some of these:

• Getting out of credit card debt
• Saving money for a house
• Paying off student loans
• Saving money to start a business
• General savings or building an emergency fund
• Saving for your children’s college education
• Investing in stock
• Making real estate investments

10% for Wants

The last 10 of the 30-30-30-10 budget rule is for your “wants” or fun money.

You can spend 10% of your net income on things like traveling, going to the movies, eating out or new clothes that you don’t need, but want. It is basically money to have fun with!

Examples of the wants category:

• Travel
• Entertainment
• Clothing
• Going out to eat
• Traveling
• Streaming subscriptions

30/30/30 Calculator

Use the 30 30 30 10 rule calculator below and in put your after tax income to figure out exactly how much you need for each budget category.

Examples of the 30/30/30/10 Budget

In 2021, the median American salary was $69,717. But of course, incomes range from person to person.

Here is an example of how you would follow this budgeting method if your income is $50,000 a year. You should use your after-taxes, take home income to calculate your budget. Should you need more guidance, you can use Taxcaster to help assist you further.

If you make $65,000 a year, your take home pay is $52,960 a year, which is about $4,413.33 a month.

The below 30/30/30/10 budget method example shows the specific percentages and amounts that you would spend per month.

Housing expenses example

$4,413.33 x 30% (.30)= $1,324

If you are making $65,000 in salary a year, then you need to keep what you spend on housing to $1,324 a month.

Needs Category

$4,413.33 x 30% (.30)= $1,324

In this example, you should only be spending around $1,300 on basic necessities like utilities, groceries, loans, transportation costs and medications or insurance.

Financial Goals

$4,413.33 x 30% (.30)= $1,324

In this example, $1,324 is what you should spend each month on your goals and savings account or even your retirement plan. Whether it is paying down debt or savings or investing.

Wants

$4,413.33 x 10% (.10) = $441

10% of your income if you make $65,000 a year should go to your fun category of eating out, traveling and any non essential expenses.

To figure out the 30-30-30-10 budget for yourself, just input your take-home paycheck each month into the above calculations.

What are the Benefits of the 30 30-30-10 Budget?

This budgeting method will help you get control of your personal finance situation and money goals. It is easy to do and stick with.

Plus, it is one of the only budgeting rules out there that includes a category for your goals. This can help you have dreams and stick to them!

Another benefit is that it does include your “Wants.” So, it is not just all work and no fun.

Looking for a spending/saving challenge? Learn about the 100 envelope method and what you should do instead of it!

Who is the 30 30 30 10 Budget IDeal For?

You might be asking yourself “Should I use the 30 30 30 rule for my budget?”

If you are looking for a clear-cut and simple way to control your spending this is a good budgeting rule to use. Especially if saving money or meeting financial goals is important to you.

If you are truly serious about improving your finances and building a better financial future, you should use the 30 30 30 10 budget.

This guide specifically will help you put more money aside for savings or investments. If you want to save enough money for an investment or a business, this is the ideal budget for you.

However, if you are already struggling to find ways to save money, this may not be the best system for you. You may want to try another system like the 50/30/20 rule.

You can also however try the The 60-30-10 Rule of Budgeting if you want to look at other budgeting strategies.

More reading: How to Live Below Your Means

How Can You Get Started with the 30/30/30/10 Rule Budget?

If you want to start budgeting using the 30-30-30-10 rule, here are some steps to follow:

1. Download a Budget Tracker

To start budgeting with 30 30 30 10, you need a budget tracker. It helps you organize and keep track of your spending. Here are 21 Free Budget Templates you can use.

2. Write Down Your Allotted Monthly Amounts

Use your after-tax, take-home pay to calculate how much you should spend each month on the 4 categories of housing, necessities, goals and wants.

30% = Your paycheck x 0.30 (Multiply that number by 2 if you get paid twice per month)

10% = Your paycheck x 0.10 (Multiply that number by 2 if you get paid twice per month)

3. Write Down All Your Expenses

One of the first steps to starting to use this rule is to write down all of your expenses. List everything out from cell phone, to car insurance to the lattes you buy at Starbucks. (Need a reason to stop buying those? Read this!)

You might uncover some things you didn’t even realize you were spending money on like subscriptions you no longer use.

Once you have written everything down for each category, compare your spend to what you should be spending.

Figure out ways to reduce that spend.

4. Figure out Your Financial Goals

Write down what your goals are so that you can know what you are contributing 30% to for the financial goals category.

Having goals and dreams will definitely help you stay on track! Write down and prioritize all the things you are thinking. If you haven’t though about owning your own business or buying a rental property you should!

The best part about money is that it is a tool that can help you make more money. So this is your chance to figure out ways to do that and start working toward it. Using 30 30 30 10 will help you focus on this.

4. Track all Your Spending

Start tracking every dollar you spend. Write it down in each of the categories.

Make sure when you’ve reached a 10% spend on wants, that you stop spending on anything that isn’t necessary!

Make adjustments to your spending to get on track. If you find that your housing payment is more than 30% of your pay, then find a way to lower it. Take on a roommate, or downsize and move to a smaller place.

5. Make Adjustments

As you continue to use the 30-30-30-10 rule budget, evaluate how it goes each month and make adjustments if needed.

If one of your spending categories is too high each month and you are going over the allotted percentage, see how you can reduce it.

Most likely, you will need to reduce what you are spending on “wants.” That category tends to get us all to overspend.

It may take some time to properly get your finances on track with this budgeting strategy, but it will be worth it in the long run.

What to Do if Expenses Don’t Match the Percentages

You may have issues with the percentages allocated for this system matching up to your levels of spend.

What should you do if your spending is under or over the allocated percentage? It is really an easy fix.

Adjust Your Expenses

If one of your categories is higher than the percentage dictates, find ways to reduce your spend in it. If your housing payment is too much then take on a roommate and reduce it.

Or move to a smaller place! Sell your car and get one that is less expensive. While these may seem like dramatic choices, if you have a personal finance goal in mind it may be worth it

CHange the Percentages

However, you can cheat the system a smidge if you are lower in the other categories. So if you find you are spending less on your needs than the allocation, simply shift that excess amount to another category where you are spending too much.

The point is you can make it work for you, just keep the overall spend in mind! Whatever you are using to manage your money, make sure you can make it work.

MOve Extra Money to the NExt Month

If you find you have extra, unused funds from one of your categories, you can roll that over to the next month.

It is likely that your spend on some things will vary from month to month. So if you spend less than expected in April, move that extra money to March in case you get hit with an unexpected bill that makes you spend more.

Increase Your Income

If you find you can’t make these spending percentages work at all, consider increasing how much money you make.

It might be worth it to take an extra job or start a side-hustle to generate more income.

PRos and Cons of the 30 30 30 10 Budget

There are always pros and cons to any financial management system you might try. Here are the pros and cons of 30 30 30 10.

Pros

• Helps you focus on long term financial goals
• Straightforward math help you stick to it
• Spreads your spending out across 4 categories instead of 3

Cons

• You only get to spend 10% on wants which may be difficult
• Housing allocation is low
• If you have a lot of credit card debt it may prove challenging to stick to the percentages

Alternatives to the 30 30-30-10 Budget

If you this budgeting system is not the right fit for you, there are several other alternatives you can try!

Zero Based Budget

A zero-based budget starts with your income and allocates every dollar to a specific category. With this system, your income minus expenses will be zero by the end of the month.

Zero-based budgeting gives you more control over your finances, but it can be time consuming. It requires you track and allocate every penny you spend.

60-30-10 Budget

In the 60 30 10 budget you allocate your spend as follows:

• 60% to Savings and Goals
• 30% to Needs
• 10% to Wants

This budget allocates even more to savings, so if your paycheck is already tight it may not be a good fit for you.

30 30 30 10 Budget vs. 50 30 20 Budget

One of the most well-known budgeting strategies is the 50 30 20 budget rule.

Like 30 30 30 10, it divides your spending into categories, but there are only 3:

• 50% goes to needs
• 30% of your take home pay is for wants
• 20% is allocated to savings

“All Your Worth: The Ultimate Lifetime Money Plan” is the book all about this system of budgeting. If you don’t think the 30/30/30/10 rule will work for you, you might opt for this instead.

Percentage Based Budgeting

Budgeting by percentages just gives you more freedom in allocating spending categories. You divide your income up into these percentages by category that you will spend.

This budget method allows you to create a custom budget plan, so it is more flexible than the other rules.

For example, you might allocate:

• 50% to needs (housing, utilities, food)
• 20% to financial goals (savings, debt repayment, investments)
• 15% to fun stuff (entertainment, traveling, eating out)
• 10% to transportation (car payments, insurance)
• 5% to miscellaneous (donations, unexpected expenses)

Budgeting by percentages can be beneficial if you have unique needs and goals. You can tailor your budget to your individual situation.

Is the 30/30/30/10 Budget Good?

If you want to take control of your money and improve your personal finance situation, you should get started with the 30 30 30 rule of budgeting and saving.

It will help guide the choices you make and help you increase your savings and find ways to make more money with investments.

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