The Ideal Budget: Is the 60 30 10 Rule Right for You?

As everything from groceries and gas to house prices increases, you may be looking to find a new style of budgeting that can help you save money and reach your financial goals. However, a quick internet search will result in hundreds of different budgets to sift through, as well as apps offering tips and tricks, making it confusing to find the right one.

During your search, you may come across some percentage-style budgets, which divide your expenses into categories that are given a certain percentage of your take-home pay to ensure you save while covering all your needs and wants. One of the most popular ones is the 60 30 10 rule budget, which promises to help you get serious about saving for your future financial goals while maintaining enough leftover money for your everyday purchases.

What is the 60 30 10 Rule Budget?

The 60 30 10 Rule Budget has a heavy focus on saving money and is often used for short-term saving goals, such as down payments on a house or a wedding. With enough planning, the 60 30 10 Rule Budget can also be used for long-term savings like retirement.

As the name implies, the 60 30 10 Rule Budget divides your take-home pay into three categories; the numbers each representing what percentage of your income should go towards the categories: savings, needs, and wants.

The largest category, 60%, is money dedicated to savings, investing, or, if you have debt, paying off your debt, such as student loans. 30% will go towards everyday living items such as rent or mortgage payments, food, utilities, transportation, and other necessities. The remaining 10% of your paycheck can be spent on entertainment, hobbies, and travel. Items that you may not necessarily need but are nice to have and enjoy.

While it’s an excellent budget for those looking to meet their financial goals, such as saving up for a house or retirement, it may not be suitable for everyone because over half of your paycheck is directed into savings. Being aware of what works for your situation is important in choosing any budget method. If your basic needs are not being covered, you may need to adjust the percentages or look for alternative budget styles.

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