Need a budgeting system that works but not sure which option is the best?
We all know budgeting can help us save money and stop going into debt. And I’m sure you want to save more money too.
But maybe one of these roadblocks keeps getting in the way:
- thinking “I’m not good at math”
- I’ll just go over budget anyway
- I have too much debt
- I don’t have any time
- Budgeting is SO restricting
Or maybe, you’re really focused on “getting it right”.
The good news?
There’s no “wrong way” to budget.
In fact there’s a lot of RIGHT ways to budget, and I’m going to share my new favorite budgeting method.
This budget rule and budget system help you:
- simplify the budgeting process
- give you freedom to spend money on FUN stuff
- be flexible and adaptive with your spending
It’s called the 30-30-30-10 budget.
I’m a big fan of making budgeting simpler, more fun, organized, and flexible.
And I believe the 30-30-30-10 budget rule will help you do all of that. You’ll have a clear focus on your biggest financial goals and a simple budgeting system to help you achieve it faster.
What is the 30-30-30-10 Budget Rule?
The goal of any budget is to focus on your big financial goals and reorient your spending to what really matters to you.
And that means making intentional choices for how spend your money to reach your financial goals.
The 30-30-30-10 budget rule splits your expenses into four categories, each with a specific percentage “bucket”.
- 30% for housing (rent/mortgage, transportation, appliances, etc)
- 30% for all other expenses
- 30% for financial goals (savings, debt, retirement, investing)
- 10% for fun money and entertainment
Those are the BIG rules and it’s up to you to determine which expenses fit into which “buckets”.
Let’s look at how to do that.
30-30-30-10 Budget Rule Percentages Explained
Let’s dive into each of these buckets a little more, starting with 30% for housing.
30% of Income for Housing Expenses
When I first heard of this budgeting system, I assumed housing referred to rent or mortgage.
But there’s a lot more we can put under the “housing” bucket. Remember, this budget system is designed to be flexible.
Anything that relates to your home could fit into the housing budget category. There are no hard or fast rules here, but here are a few common budget categories that fit well under housing.
- transportation costs (gas, bus pass, uber)
- household products – dish soap, laundry detergent, toilet paper
- lawn mower and yard maintenance
- home appliances
There are a lot of possible expenses you can add to the 30% housing bucket. In a few minutes, I’ll share steps to start the 30-30-30-10 budget from scratch by listing out ALL of your expenses.
But first, on to the next bucket.
30% of Income Covers All Other Expenses
This section is pretty straightforward.
Any expenses that don’t fall into your housing section and don’t relate to a financial goal will make up this 30%.
Here are a few expenses to consider:
- all bills and utilities
- pet expenses
- daycare and other child expenses
- streaming services (these could also go under housing)
- educational expenses
- tithing or charity donations
30% is for Your Financial Goals
Financial goals are my favorite part of ANY budget!
Seriously, hearing people’s financial goals gets me excited, and OUR goals are the reason we started budgeting in the first place.
We wanted to get out of debt ASAP so we could afford to start a family. It was that simple.
So we focused every spare dollar we could find to pay extra money on our student loan debt.
And using a zero based budget like this was a big reason we could focus so much money on our goals.
What financial goals do you have?
The list could be HUGE or really specific.
If you’ve never taken time to think about or write down your financial goals, do that right now.
I can’t tell you how important your goals are for your budget. The people I know who stick to their budget and make a difference in their futures are the people who have real goals that MATTER to them.
Okay, all of my crazy energy and passion aside, here are a few examples of financial goals:
- creating an emergency fund
- getting out of debt
- buying a house
- starting a family
- going on an anniversary trip
- starting a business
- giving outrageous amounts of money to charity
The more specific your goal is, the better. Instead of creating a goal to “save money”, set a specific goal to save “X” dollars for “X” reason in “X” number of years.
Here’s a better example.
When we got married, we set a goal to save $5,000 to go on a 2 week trip to Ireland for our 5 year anniversary.
And this is where it gets exciting.
How fast do you think you can reach them if you use 30% of your income to pursue your goals?
Read that again 👆🏻
Probably WAY FASTER than you can imagine.
And maybe you have 5-10 goals you really care about. You can still focus on all of them, but try focusing MOST of your money on just 2-3. Even better if you focus most of your money down to ONE.
Here’s a quick action step.
Write down all of your goals and number them off. The most important goal is #1.
Now you have focus and direction to reach all of your financial goals with 30% of your income.
10% is Reserved for Fun and Entertainment
Remember when I said the 30-30-30-10 budget rule creates fun and flexibility to enjoy your money?
This is it.
The fun money bucket covers all of the random, impulsive, or just for fun spending you do every month.
10% may not feel like a lot, but even this small amount will create so much freedom in your budget.
Most of the negativity surrounding budgets focuses on limits and restrictions.
But, if you set up your budget to focus on the goals and things you care about, there should be money set aside to enjoy and have fun with.
So, what expenses fit into the fun money bucket? Glad you asked.
- dining out
- fancy starbucks coffee
- drinks with friends
- going to the movies
I can’t possibly list every expense for your fun money bucket, but I hope you get the idea.
A budget helps you focus on your big goals, be more intentional, but still enjoy your money.
I believe the 30-30-30-10 budget rule will help you create a goal oriented, flexible budget that creates room for fun.
Benefits of the 30-30-30-10 Budget
Budgeting in general is full of benefits for your life and future goals. And one of the reasons there are so many budget rules out there is that each rule works better in some situations, and worse in others.
For example, the 30-30-30-10 budget rule works EXTREMELY well for people with a higher savings rate and a priority on reaching financial goals faster.
If you have a high savings rate and are focused on paying off debt or saving for a down payment on a house, a 30-30-30-10 budget might be the perfect style of budget to try.
Outside of high savings rates and financial goals, there are a few very important benefits to starting a 30-30-30-10 budget.
Simple to Set Up
There are six steps, all outlined below.
With simple rules and budget categories – 30% for housing, all other expenses, financial goals, and 10% set aside for fun money, a little simple math gives a solid outline for how to best spend your money.
In less than 30 minutes you can create all of your budget categories and assign each spending category to one of the budget buckets. The next step is finding a monthly budget spreadsheet to start tracking your expenses.
You’ll Achieve Your Financial Goals Faster
My favorite part of budgeting, and really the focus of our budget is to reach our financial goals faster.
Need to pay off debt? Save money for a down payment? Go on a month long trip?
A 30-30-30-10 budget might be perfect for you.
30% of your income goes a LONG way, and when you can consistently dedicate that much money to your financial goals, you’re going to crush them!
If we used the 30-30-30-10 budget rule, we’d have $1,722 EVERY MONTH to reach our financial goals.
After a year, that’s $20,664!
Prioritizes Fun and Joy
Budgets get a bad reputation for being restrictive.
But I think that’s because of the wrong perception.
The goal of a budget is to prioritize your financial goals and spending so you can spend more money on the things YOU LOVE. A budget gives you PERMISSION to spend money on what matters most – and that means setting aside money for fun.
10% might not seem like a lot, but our budget would set aside $574 for fun. That’s more than we spend right now.
Creates Structure and a System to Follow
The best budget is the one that works for you, and sometimes we need structure and routine to be the most successful.
I have a 3 year old, and she DEFINITELY functions the best on a consistent routine. And interestingly enough, adults aren’t much different.
We need routine and structure, and you can find that in a 30-30-30-10 budget.
When you follow the percentage buckets, align your spending goals and categories with the percentage buckets, you’ll set yourself up for a successful budget.
Works Great with Cash Envelopes
Cash envelopes are a proven way to save money and stick to your budget.
We used them for years to help us learn how to budget and focus on becoming debt free. If you’re new to cash envelopes and how they work, read how the cash envelope system can help save money.
Or you can watch this video on how to start the cash envelope system.
And if you hate carrying around cash, try Qube Money digital cash envelopes. Read more on digital cash envelopes.
6 Steps to Create a 30-30-30-10 Budget
Here we go, it’s time to make your 30-30-30-10 budget! Follow this simple process and you’ll be budgeting your way to more freedom, fun, and reaching your big financial goals.
1. Set Goals You Care About
Like really care about. This is going to be the focus of your 30% financial goals bucket.
The goal of any budget is to focus on your big financial goals and reorient your spending to what really matters to you.
To stop spending money on things you don’t care about, and start enjoying spending money on your priorities.
I never knew about the 30-30-30-10 budget rule when I started budgeting.
I WISH I learned about a simple budget rule to guide how we spent our money. The big benefit of this budget is the heavy focus on your financial goals.
You get an entire 30% of your income focused on your biggest financial goal.
Which means 30% for:
- paying off debt
- buying a house
- starting an emergency fund
- a big anniversary trip
- buying a camper
- paying for grad school
And the beautiful thing about the 30-30-30-10 budget rule is the flexibility.
If your goals change, you can quickly adjust your 30% bucket for financial goals to focus on your newest, most important goal.
No budgeting system is perfect, but this one helps you reach your financial goals FAST!
2. Divide Your Income into the 30-30-30-10 Budget Percentages
You need to know exactly how much money is available in each bucket. A little math is required here, but please don’t run for the hills.
- Add up your total net income – your entire take home pay from all of your income streams.
- Got it? Good.
- Next, multiply that number by .30.
- That will give you the dollar amount for each of the 30% categories.
Here’s a quick example.
On a typical month, our total income = $5,740.
30% of $5,740 (.30×5740) = $1,722
Then you need to calculate the 10% fun money with quick multiplication.
10% of $5,740 (.10×5740) = $574
That means our 30-30-30-10 budget will look something like this:
Congratulations! You have your big budget buckets. Now let’s look at all of your expenses to see if these percentages will work.
3. Write Down ALL of Your Expenses
Grab paper and a pen and brainstorm all of your expenses.
I like to start with bills because those are consistent every month. After bills, think of all other flexible spending categories:
- Dining out
You get the idea. Look through your bank statements, your credit card bill, or receipts to help you remember all of your expense categories.
4. Label Your Expenses with the Bucket They Fit Under Best
As you look at your list of expenses, decide where each expense best fits in your 30-30-30-10 budget.
Then write the budget bucket next to that expense. Do this for every single expense you have.
During this process you might change your mind for expenses and which budget bucket you want to assign it to – housing, other expenses, financial goals, or fun.
Remember that your budget can be flexible and there’s no “right way” to assign your budget categories.
For example, groceries can fit into either “housing” or “all other expenses”.
Or, dates can be assigned under “fun money” or “all other expenses”.
It’s really up to your discretion. The important thing is to try your best to stick to the percentages.
And spoiler alert, if your budget doesn’t strictly adhere to the 30-30-30-10 budget rule…
Your housing can be over 30% as long as another bucket is a little under to make up the difference.
Budgets need to be flexible. Don’t be afraid to adapt your 30-30-30-10 budget to fit your specific financial needs and goals.
5. Add Up Your Expenses for Each Budget Category
Now it’s time to test out your expenses for each budget bucket.
Add up all of your housing expenses, other expenses, financial goals, and fun money expenses.
Do they all fit into your percentages?
In the example from above, all of my housing expenses need to be $1,722 or less. If yours is less than what you calculated for each percent category, you’re set to go!
But maybe my “other expenses” bucket expenses are higher that $1,722.
That means I need to make some adjustments. Here are some ideas that could work:
- Cut your expenses
- Move an expense to a different category – fun money, housing, financial goals
- Lower the budgeted amount in a different bucket. It’s okay for housing to be 35% if financial goals are 25%
Tinker around until you have a budget you feel good about.
6. Get a Monthly Budget Spreadsheet to Track Your Expenses
You can search the internet for a free or cheap budget spreadsheet and start using it to track your monthly expenses.
If you want a simple, easy to use budget, I have an annual budget spreadsheet and a monthly budget spreadsheet.
Both come with video tutorials to help you get set up.
Now you’re truly ready to use the 30-30-30-10 budget to reach your financial goals.
Let’s get after it!
Are You Ready to Start a Budget that Works?
The 30-30-30-10 budget rule is a perfect place to start budgeting. It creates a simple, easy to follow system with flexibility and freedom to focus on having fun while achieving your biggest financial goals.
You’ve got nothing to lose trying it out for a few months to see if it’s a good fit for you. And I’m here to answer any questions or obstacles that pop up along the way.
If you hate it, there are more budgeting methods to try.
But if it works, it will change your life.
The next step is finding a budget spreadsheet that you can use to track your 30-30-30-10 budget, and I highly suggest this monthly budget spreadsheet.