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Is the 60/30/10 Budget Right for You?
The 60/30/10 budget may help you better manage your expenses in an economy with high inflation.
Tiffany Lashai Curtis is a former NerdWallet personal finance writer. Before NerdWallet, she had over 5 years of experience reporting on issues that affect marginalized communities.
Amanda was a policy analyst for the National Women's Law Center before writing about demographic trends at the Pew Research Center. She earned a doctorate from The Ohio State University.
Amanda Barroso, Ph.D., is a writer and content strategist helping consumers navigate budgeting, credit building and credit scoring. Before joining NerdWallet, Amanda wrote about demographic trends at the Pew Research Center and got her Ph.D. from The Ohio State University.
Her work has been featured by the Associated Press, Washington Post and Yahoo Finance.
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Budgeting frameworks like the 50/30/20 rule can help you map out your spending, but sticking to them isn’t always realistic. Inflation, where you live, or big-ticket expenses, such as childcare, can drive your essential costs well past the 50% mark.
If that sounds like what’s happening with your budget, the 60/30/10 budget might be a good alternative.
Here’s how your after-tax income is divided in the 60/30/10 budget:
60% goes toward essential expenses, such as housing, food and transportation.
30% goes toward wants, such as dining out, streaming and subscription services and entertainment.
10% goes toward savings and debt repayments above the minimum payments.
Here’s what you need to know before trying this budgeting method.
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More realistic for today’s costs, which include high housing prices, childcare and rising prices at the grocery store.
Good budgeting option for young adults who have higher “startup” costs like a first apartment, buying a car, moving to a new city for a job, student loan repayments, etc.
Provides guilt-free flexibility to people with lower income households who found the 50/30/20 budget unrealistic.
Cons
Slower progress on savings and debt repayment, which may leave you carrying high-interest balances longer.
Less effective for high earners, who could afford to save more aggressively.
May hide bigger spending problems — for example, if high rent is driving costs, downsizing or relocating might be a better solution than raising your “needs” to 60%.
Knowing what debts you owe and the savings goals you have, whether it’s to build your emergency fund or save for a vacation or a home, is an important early step in budgeting.
60/30/10 for those seeing early retirement 60/30/10 for those seeing early retirement
There’s a less popular approach to the 60/30/10 budget, which calls for putting 60% of your income toward your savings goals. This strategy is geared toward people with higher incomes who may use this budget breakdown as a means to build generational wealth or retire early.
2. Track your spending
Knowing how much money you have coming in and going out is an essential part of any budget. With real numbers, you can see where every dollar is going and assess whether your current spending makes room for those savings goals you identified earlier.
You can track your expenses in a spreadsheet or use an expense-tracking app, depending on your personal preference.
3. Focus on an area of improvement
Focusing on the areas where you tend to overspend can make can make sticking to the 60/30/10 budget a little easier.
If your “wants” category exceeds the 30% threshold every month, it’s time to analyze your transactions and commit to making different choices the following month.
Do the math to calculate what 30% of your take-home pay is in real dollars. Once you have that number, it’s much easier to designate expenses: $100 for dining out, $80 for concert tickets, $20 for your favorite streaming service. Once your list is complete, start making cuts to get your spending back within that 30%.
4. Use budgeting to empower you
Mindset matters when it comes to budgeting. A budget isn’t meant to be restrictive — it’s a tool that helps you take control of your money. The goal is to cover your essentials, save for the future, and still have room for the things you enjoy.
If your budget feels too limiting or unrealistic, don’t be afraid to adjust it. Life changes, and so should your budget. Keep an eye on your spending and make regular tweaks so your plan continues to support your goals.
Stress less. Track more.
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