60/30/10 Rule Budget [2024] Easy Guide

Saving money is hard. That’s why the average American saves only 3.6% of their income. 

But you’re not average. You’re above average!

So, how can you improve your saving skills? 

One option is to use the 60/30/10 rule budget. It’s a budgeting strategy that calls for setting aside 60% of your after-tax income. 

Is the plan ambitious? Definitely. 

But with the right mindset, you can totally pull it off! Plus, the results would be incredible for your finances in the long term. 

What Is The 60/30/10 Rule Budget?

The 60/30/10 rule budget is a strategy where you devote 60% of your income to savings, 30% to needs, and 10% to wants.

The massive percentage that’s allocated to the “savings” category is what distinguishes the 60/30/10 budget from other budgeting strategies. Setting aside 60% of your income is a lot!

It also leaves you with less room for necessary expenses and recreational spending. 

That’s why the 60/30/10 rule isn’t for the faint of heart. It’s an intense budgeting strategy meant to put your savings into overdrive.

Is The 60/30/10 Rule Budget Worth It?

The 60/30/10 rule budget is definitely worth it for anyone who wants to boost their savings – and fast!

Let’s say you make $60,000 a year after tax. If you set aside 60% of that, you’ll end up saving $36,000 per year. After a few years with that sort of discipline, you should be well on your way toward meeting your most ambitious savings goals.

With its emphasis on saving, the 60 30 10 rule budget is an especially good idea for anyone who:

• Wants to build wealth ASAP
• Hopes to retire early
• Is saving for a home or another major purchase
• Needs to pay off significant debts (since “savings” could be used for debt repayment)

Of course, the 60/30/10 rule budget isn’t for everyone.

Saving 60% of your after-tax income might be simply impossible for you. We all know life gets complicated. The cost of rent could increase, you could lose your job, your family could grow in expected or unexpected ways – really, anything could happen. 

So, if you’re in a place where saving 60% of your income just isn’t feasible, then remember: There’s no shame in choosing a more realistic goal. Setting a target that you couldn’t possibly reach will only make you anxious and disappointed.

And then there’s the issue of using only 10% of your income for “wants.” That’s not as high as some other budgeting plans. 

Discipline is great, especially if you want to save lots of money. But there’s nothing wrong with saying, “Hey, I love to travel, eat in restaurants, and do other things that cost money, so I’m just not a 60/30/10 kind of person.”

Ultimately, it’s your job to choose a budget that works for you, and there are plenty of other options. Check out this article on the biweekly money saving challenge. 

Do you get paid twice a month and find yourself struggling to account for that in your budgeting? Learn how to budget biweekly paycheck. And if you need to ramp up your savings fast, learn how to save $3000 in 3 months.

There’s also the 52 week money challenge, which is fun and simple. 

The 60/30/10 rule budget is just one option that works well for certain people.

How Does The 60/30/10 Rule Budget Work?

The 60/30/10 rule budget works by telling you how much of your income should go toward different categories.

As a reminder, here’s the budget breakdown:

• 60% for savings
• 30% for needs
• 10% for wants

And to be clear, these percentages should come from your post-tax income (also known as your “net” income). You might think you’re making $100,000 a year – but let’s be real. Uncle Sam is going to take a big-ol’ bite out of that, so your “post-tax” earnings might be somewhere around $78,000.

You could also conceptualize your budget on a paycheck-by-paycheck basis. If you receive $800 at the end of a pay period (with taxes already taken out), you could apply the 60/30/10 rule to each payment.

Let’s look at each component of the 60 30 10 rule budget.

60% for Savings

Setting aside 60% of your income is ambitious. For instance, financial advisors often advise saving around 15% of your income.

But if you can pull it off, you’ll be putting yourself in solid financial shape.

You could use your savings to:

• Prepare for retirement
• Buy a home
• Build wealth
• Start a business
• Pay off existing debts

And where should you stash the money that you’re saving? The sock drawer is one idea – but I don’t recommend it.

I do recommend putting your money in a high-yield savings account (HYSA) like CIT Bank. That way, it will earn interest and grow your wealth even further. And as long as you choose a bank or credit union that’s backed by the Federal Deposits Insurance Corporation (FDIC), the first $250,000 you save will be completely safe. 

You could also invest your savings, which could help them grow even faster. Learn about the best way to invest money. Just remember that investments carry a certain amount of risk.

30% for Needs

After savings, the next biggest chunk in the 60/30/10 rule budget is earmarked for “needs.”

Here are some expenses that fall into the “needs” category:

• Rent/mortgage payments
• Utilities
• Groceries
• Healthcare 

So, we’re talking about human essentials like food, shelter, and health. Of course, you can’t skimp on these expenses altogether. That’s why they’re called “needs.” But you could try to decrease the amount you’re spending. Consider moving into a more affordable home, finding ways to lower your grocery bill, and decreasing your energy use at home. 

And then there’s another important task: distinguishing between genuine “needs” and mere “wants.” 

10% for Wants

A warm cup of coffee. A refreshing ice cream cone. A delicious meal. A getaway to a beautiful place.

These things can make life special. But they also cost money, and they’re not exactly necessary. If you want to stick to the 60/30/10 budget, you might have to give up some of life’s costly pleasures. 

If you make $60,000 a year after tax, you’ll only have $6,000 for “wants.” That breaks down to $500 per month. This might sound like a decent amount, but you can blow through it quickly. 

A streaming service here, a night out there – it’s easy to bloat your budget in no time. And then there are one-time expenses like trips, weddings, and gifts – all of which, as important as they might seem to you, definitely belong in the “wants” category.

None of this is to say that the 60/30/10 rule budget is impossible. But you’ll have to make a plan for eliminating certain “wants” from your budget, which might call for some drastic lifestyle changes.

My recommendation: Think of some free forms of entertainment, and then get used to enjoying them. If you can replace a golf game with a nature walk, you’ll be doing your budget a massive favor.  

Tips for Using the 60/30/10 Rule Budget

The 60/30/10 rule budget is definitely ambitious, but you can pull it off with the right approach. 

Here are some helpful tips:

• Use a budgeting app. Rocket Money and YNAB are user-friendly platforms that make it easy to set goals and track your spending. Learn more with this Rocket Money review, then check out this Rocket Money vs YNAB comparison.
• Boost your income. The more you make, the easier it will be to meet your savings goals. You can even consider alternative income streams. Learn how to maxmize your earnings with DoorDash or how to donate plasma for money.
• Get your friends involved. The 60/30/10 rule is so intense that you might have to change your social life in order to succeed. But what if, instead of feeling FOMO (“fear of missing out”), you and your friends budgeted together? More accountability, less regret – it’s an ideal solution!

Pros and Cons Of The 60/30/10 Rule Budget

The 60/30/10 rule budget is a great way to save more money, but it’s not always fun or easy. What can you hope to achieve, and where could things get hectic? I’ll explain below.

Pros

• The plan prioritizes saving. Some budgeting strategies call for setting aside a small portion of your income, but the 60/30/10 rule will have you saving fast.
• You’ll be forced to discipline yourself. This plan gives you just 10% of your income for “wants.” Some folks might find that intimidating – but if you’re really trying to buckle down, this plan could help you do it. 
• The formula is simple. It can be hard to stick with a convoluted plan. The 60/30/10 rule is easy to understand, which should make it easier to follow. 

Cons

• Your “needs” might exceed 30% of your income. If your housing, healthcare, and grocery costs already account for more than 30% of your earnings (and there’s no way to lower them), then the 60/30/10 rule will be impossible for you.
• Having just 10% for “wants” could require significant sacrifice. Some other budgeting strategies allocate 30% for “wants.” With only 10%, you might have to seriously change your lifestyle. 
• You could suffer “budgeting burnout.” Setting goals is great, but if your initial target is too lofty, you could get discouraged – and fast. 

Commonly Asked Questions About The 60/30/10 Rule Budget 

Which Are The Categories In The 60/30/10 Rule Budget?

The categories in the 60/30/10 rule budget are “savings” (60%), “needs” (30%), and “wants” (10%). The high percentage for savings is what makes this strategy so different from other budgeting plans.

What Is The 70 20 10 Budget Rule?

The 70 20 10 budget rule calls for using 70% of your income for monthly bills and everyday spending, 20% for saving and investing, and 10% for paying off debts and making donations. 

What Is The 50 30 20 Budget Rule?

With the 50 30 20 budget rule, you put 50% of your income toward “needs,” 30% toward “wants,” and 20% toward savings. It’s a great strategy for steadily building wealth.

What Is The 80 20 Rule In Financial Planning?

The 80 20 rule says that you should put 20% of your income toward savings – allowing you to then spend the rest. This strategy is simpler than other rules because it doesn’t require you to distinguish between “needs” and “wants.” 

What Is The 60 20 20 Rule?

The 60 20 20 budget rule involves putting 60% of your income toward “needs,” 20% toward “wants”, and 20% toward savings. It’s a good option for anyone with significant expenses since it allocates over half of your income to the “needs” category.

60 30 10 Rule Budget Explained?

The 60 30 10 rule budget is designed for people who want to save money quickly. It calls for saving 60% of your income, then using 30% for “needs” and 10% for “wants.” It requires some serious discipline, but if you succeed, you’ll save money quickly. 

Which Budget Rule Is Best?

The “best” budget rule depends on your situation. If you want to save quickly, give the 60/30/10 rule a shot. You’ll save 60% of your income, then use 30% for necessary expenses and 10% for “wants.” It’s tough, but it’s also great for your financial future!