What Is the 30-30-30-10 Budgeting Method?

If you hear the word ‘budget’ and cringe, you aren’t alone. Only 45% of Americans follow a budget, but everyone should. Budgeting is the best way to know where you spend your money and where you SHOULD spend your money.

If budgeting seems overwhelming to you, consider the 30 30 30 10 budget. It’s great for beginners and experts alike and can help you get on track.

30 30 30 10 budget overview

The 30 30 30 10 budget takes the guesswork out of how to budget. The numbers pertain to percentages of your income and how you should spend it. They aren’t hard and fast rules you must abide by, but they are a great way to guide yourself to proper budgeting.

How does it work?

The 30 30 30 10 rule is as follows:

The numbers add up to 100% of your income, so you have a guide on how to best allocate your funds.

Can anyone follow the 30 30 30 10 rule?

Anyone can use the 30 30 30 10 rule, but it doesn’t benefit everyone. The majority of people that use it are people new to budgeting or who have trouble managing their finances. With 64% of Americans living paycheck to paycheck, it’s safe to say that most Americans would benefit from using this budgeting rule.

However, there are certain people it doesn’t work for, such as those who live in a high-cost area. If housing is expensive where you live, it could be impossible to keep your housing costs at 30% or less of your income. You might find that you have to adjust your necessary expenses to take up more than 30% of your income while decreasing your expenses in other areas.

Pros and cons

Like any budgeting method, there are pros and cons of the 30 30 30 10 budget.



  • It restricts your discretionary spending quite a bit
  • It only works if you track your spending carefully

Difference between the 30 30 30 10 budget and other budgets

The 30 30 30 10 budget isn’t the only budgeting option you have if you want to follow a program. There are other options too. Here’s how they stack up.

What’s the 30 30 3 rule?

The 30 30 3 rule helps guide you when you’re buying a home. If you’re worried about becoming house poor, this can be an excellent rule to follow.

The first part goes right along with what the 30 30 30 10 rule says – don’t spend more than 30% of your gross monthly income on housing costs. This means your total mortgage payment shouldn’t exceed 30% of your income.

The second ‘30’ in the rule stands for the amount of the down payment you make. You should put down 30% on the home, no matter what the loan program allows. By making a 30% down payment, you avoid Private Mortgage insurance, have instant equity in the home, and keep your mortgage payment lower.

The ‘3’ stands for not spending more than 3x your annual gross income on a home to keep your home budget in check. For example, if you make $100,000 a year, you shouldn’t spend more than $300,000 on a home.

What is the 50 30 20 budget rule?

The 50 30 20 budget rule is similar to the 30 30 30 10 rule but with a little more flexibility. This works better for those who can’t restrict their discretionary spending to 10% of their income and/or those who don’t have major financial goals they want to achieve since the 50 30 20 budget doesn’t focus on financial goals.

Here’s what it means:

  • 50% of your income covers your necessities, including your housing payment, necessary food and clothing, utilities, and other necessary living costs.
  • 30% of your income covers your discretionary spending or anything that isn’t necessary to spend money on
  • 20% of your income covers your savings and debt payoff

As you can see, this budget gives more leeway to ‘fun spending’ and has a smaller emphasis on saving money or paying off debt.

What is the 80 20 rule?

If you don’t need the strict percentages of the 30 30 30 10 rule, the 80 20 rule may work for you. It breaks your spending down into two categories:

  • 80% covers all necessary expenses and wants or fun spending
  • 20% covers savings, financial goals, and debt payoff

This method only works if you are great at budgeting, carefully track every penny you spend, and won’t’ go overboard without a threshold of what you should spend on ‘fun money.’

Set up a 30 30 30 10 budget 

Setting up a 30 30 30 10 budget isn’t as hard as it seems. Just use these simple steps to get on your way.

Calculate your income

Start by totaling up your income. If you only have one source of income and you earn a salary, this step is easy. But, if you have multiple sources of income, such as side gigs or part-time jobs, you’ll need to add up all monthly income.

If you work on a variable income, use the income from your lowest earning months to create your 30 30 30 10 budget.

Calculate your expenses

Knowing your expenses is a big part of making this budget work. Even if you think you know how much you spend each month, pull your bank statements and credit card statements over the last year and total up your spending.

Divide expenses into categories

Once you have a total, divide your expenses into categories, including housing, necessities, and discretionary spending.

Be careful with the categories that can cross lines. For example, you need food, but do you need that expensive steak or that extra bottle of wine? Think of what’s necessary and what’s a splurge, and put the items in the appropriate categories.

 What percentage of your income should be spending money?

According to the 30 30 30 10 rule, only 10% of your income should be spending money. Looking at your bank and credit card statements, decide if that will work for you. If it will be too hard to fit your spending into that amount, look at what you spend and see where you might be able to cut back.

Set financial goals

Since 30% of your income should go toward financial goals, make sure you write your goals down. Here are some examples:

Adjust spending to fit the percentages

Your final step is to adjust any spending that exceeds the percentages. If you’re way over, you may want to consider another budgeting method. But if you’re close and dedicated to using this budgeting rule, adjust your spending to meet the categories.

For example, if your discretionary spending is too high, look at your food expenses. Do you eat out too often? Would it make more financial sense to bring your lunch to work and not eat out or to meal plan and not run through the drive-thru so often?

Adjust your spending so that you’ll feel comfortable, and that will allow you to feel empowered and not restricted.

What are beneficial financial goals to set when following the 30 30 30 10 budget?

The 30 30 30 10 rule may feel restricting or overbearing at first, but it can help you reach even the toughest financial goals.

With these strict rules in place, you’ll put more emphasis on saving for your financial goals and getting yourself out of debt. Nothing good comes out of carrying high-interest consumer debt, and this plan will help you focus your money on it so you can get debt-free and have more money to save toward other, more beneficial financial goals.

Final thoughts

Any budget will feel restricting at first, but with practice, the 30 30 30 10 budget can help you come out ahead financially much sooner than any other budget. With a hyper-focus on your financial goals and getting out of debt, you’ll use your money in the most powerful way possible, allowing you to achieve financial freedom.

Samantha Hawrylack

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