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The 30-30-30-10 budgeting rule 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.
This rule of budgeting offers a percentage-based way to calculate how and where you should spend your money:
- 30% should be spent on housing needs
- 30% should be budgeted to needs and necessities like food an utility bills
- 30% should be spent on financial goals and savings
- 10% should be spent on your wants, or fun money
Table of Contents
How to Budget with the 30-30-30-10 Budget Rule
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. The 30-30-30-10 rule of budgeting 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?
This rule of budgeting is percentage-based. It includes 4 categories.
These categories are what you will place your 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 budgeting categories:
30% for Housing
According to the 30-30-30-10 budgeting rule, 30% of your income should go to your home expenses.
That includes your mortgage or rent, property taxes, homeowner’s insurance and even maintenance costs.
Examples of housing costs:
- Rent
- Mortgage
- Property taxes
- Upkeep on your house
If you find that your housing costs 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 guide is for your necessities. This includes anything you have to have, like food, utilities, healthcare and car insurance.
Examples of Needs:
- Monthly utility bills
- Car insurance
- Health insurance
- Loan payments
- Groceries
- Car payment
Try this list of cheapest foods and groceries to buy to help cut down your spend on the needs category.
30% for Financial Goals
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.
But in this rule for budgeting, you need to allocate 30% of your income to your financial goals.
We don’t often think about our financial goals, but they can be so important for your money health and your future.
More reading: Why Can’t I Save Money?
Financial goals can include some of these:
- Getting out of 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.”
You can spend 10% of your 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 Rule Calculator
Use the 30 30 30 10 calculator below and in put your take home pay to figure out exactly how much you need for each budget category.
What are the Benefits of the 30/30/30/10 Budget Rule?
This rule for budgeting will help you get control of your finances. 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!
Examples of the 30/30/30/10 Budget Rule
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 budget if your income is $50,000 a year. You should use your after-taxes, take home income to calculate your budget.
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 rule example shows what you would spend per month.
Housing costs example
$4,413.33 x 30% (.30)= $1,324
If you are making $65,000 in salary a year, then you need to keep your housing costs to $1,324 a month.
Necessities
$4,413.33 x 30% (.30)= $1,324
In this example, you should only be spending around $1,300 on necessities like utilities, groceries, loans, 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. Whether it is paying down debt or savings.
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 anything that isn’t a necessity.
To figure out the 30/30/30/10 budgeting rule for yourself, just input your take-home paycheck each month into the above calculations.
Who is the 30/30/30/10 Budget Rule IDeal For?
You might be asking yourself “Should I uses 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 rule.
This guide specifically will help you put more money aside for savings or investments.
More reading: How to Live Below Your Means
How Can You Get Started with the 30/30/30/10 Budget Rule?
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, 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.
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.
Is the 30/30/30/10 Rule Budget Good?
If you want to take control of your finances and improve your 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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