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If you’re not living paycheck to paycheck and are looking to accelerate your progress toward your financial goals, the 60 30 10 rule budget is what you need.
But what exactly is this 60 30 10 rule budget?
It’s a simple percentage-based type of personal budget that divides your income into three clear categories.
By following this simple budgeting method, you can take charge of your finances, bring order to the chaos, fast track toward your goals, and start genuinely enjoying your financial journey.
So, are you ready to find out what it is and how it can help you reach your money goals in 2024?
Let’s dive in now!
What Is the 60 30 10 Rule Budget
The 60 30 10 rule budget is a straightforward method to manage your finances by dividing your monthly income into three distinct categories:
- 60% for Savings: A big chunk of your income is set aside for important stuff down the road. This could be anything from saving up for a house, putting money away for your or your kids’ education, growing your wealth, or ensuring you’re all set for retirement. It’s also where you chip away at any debts, so you’re not just saving but also getting financially healthier.
- 30% for Needs: This part takes care of the must-haves – the things you can’t go without, such as rent or mortgage, groceries, utilities, healthcare, etc. This 30% ensures all your essential bills and expenses are covered, so you don’t have to sweat the small stuff.
- 10% for Wants: Here’s the slice of your budget that’s all about enjoying life. It’s a little pocket of your income for dining out, hobbies, movie nights, or whatever makes you happy. It’s not just about saving and paying bills; it’s about enjoying your life too!
As you can see, this budgeting plan focuses more on savings over spending. In short, the 60 30 10 rule budget is a simple, no-stress way to keep your money in check. You’re looking ahead, taking care of the present, and still having room to enjoy life.
Who Thrives with the 60 30 10 Rule
Are you setting your sights on some big financial goals? The 60 30 10 rule budget might just be what you need.
Here’s who will find it most helpful:
- Budgeting Beginners: If you’re new to budgeting or have struggled with sticking to a financial plan, this budgeting method is a great starting point. Its simplicity and clear structure make it ideal for those who need a straightforward roadmap to manage their finances.
- Forward Thinkers: Looking to boost your savings for big goals down the line, like retiring comfortably, getting your own place, or building an emergency fund? This 60 30 10 rule budget will be your best friend. By putting 60% of what you earn into savings and investments, you’ll get to those big dreams faster.
- Quick Debt Busters: If you’re all about getting out of debt as soon as possible, this budgeting rule is right up your alley. The 60% allocated to savings will knock out those debts quickly, which means you’ll be waving goodbye to those debts sooner than you think.
- Cultivate Solid Spending Habits: This budgeting method is not only for people who already have their spending under control but also fantastic for those who want to develop better spending habits. With less than half (40%) of your income going towards essentials and non-essentials, this plan encourages you to think about where your money’s going.
Does the above sound like you? Still unsure?
No worries. Let’s get more clarity on this in the next section.
When the 60 30 10 Rule Might Not Fit
Although the 60 30 10 rule budget is a fantastic budgeting method, it’s not a one-size-fits-all solution.
Here are some who might need to look into other types of personal budgets:
- People Living Paycheck to Paycheck: If most of your money is already stretched thin covering the basics, sticking to the 30% for essentials isn’t realistic. The 60 30 10 rule budget will not fit you well.
- Variable Income Earners: If your income goes up and down like a rollercoaster, fitting it into the neat boxes of 60%, 30%, and 10% will be difficult. You will need something more flexible that can move with your fluctuating income.
- Those Already Hitting Savings Goals: For those who are already smashing their financial goals, locking away 60% at this stage might feel like overkill. You might be looking for a plan that lets you use your money in ways that better suit your already healthy financial state.
- Detail Lovers: If you love getting into the nitty-gritty of every dollar and cent, this budgeting method will seem a bit too broad-stroke for you. You might find more joy in a detailed budgeting method like zero-based budgeting.
In short, the 60 30 10 rule has its perks, but it’s not for everyone. It’s important to take a good look at your own financial situation and goals before deciding if this is the right fit for you.
Starting Your 60 30 10 Rule Budget Journey
Alright, ready to get your finances in shape with the 60 30 10 rule budget?
Let’s break it down into simple, easy steps to kickstart your journey to getting your finances in order. And trust me, it’s easier than you think!
1. Calculating Your Take-home Pay
First, start by calculating your total monthly take-home pay.
This includes everything you earn – your main job, side gigs, freelance work, investment income, and any other income.
Knowing exactly how much and what you’re working with is vital, as it lays the groundwork for splitting your money according to the 60 30 10 rule budget.
2. Setting Your Financial Goals & Priorities
Next, you first allocate 60% of your take-home pay to the savings category, which also includes knocking out debts and investing.
You will want to spend some time thinking about your financial goals ( short-, mid-, and long-term) before proceeding to divide this up.
Financial goals include saving up for an emergency fund, a new house, your child’s education, investing, retirement savings, paying down any debts, etc.
This category is all about securing your financial future.
3. Covering Your Essential Expenses
The 30% allocation here is for your non-negotiable expenses – the cost of keeping the lights on, keeping your fridge stocked, and having a roof over your head. And, of course, any other essential expenses such as gas or transportation, insurance, healthcare, etc.
But bear in mind that it’s essential to distinguish between what’s truly a need and what can be categorized as a want, as this can significantly impact your budget’s effectiveness.
4. Spend on Whatever Makes You Happy
The last remaining 10% of your take-home pay is for your personal enjoyment and lifestyle choices.
It’s about allowing yourself to enjoy the fruits of your labor without compromising your financial goals. This category includes dining out, entertainment, hobbies, and other non-essential indulgences.
Just make sure to keep this part in line so it doesn’t overlap with your needs or savings.
5. Track and Adjust
Finally, keep an eye on your budget. Keeping a close watch on your budget is essential, and here’s how you can make it part of your routine:
- When to Check-In: What works best for you – a quick look every week or a deep dive once a month? Weekly check-ins are perfect for catching any slip-ups early. On the other hand, monthly check-ins give you the bigger picture of how you’re doing financially. Pop these check-ins in your calendar, like a standing coffee date with your budget.
- Budgeting Apps: These apps keep track of your spending as it happens, help categorize your expenses, and can even nudge you if you’re spending more than planned. Pick one that suits your style and watch it simplify your life.
- Reflect on Your Spending: Do a little detective work each time you check your budget. What’s your spending telling you? Maybe you’re consistently overspending in one area, or an unexpected expense shook things up. Understanding why you spend the way you do is critical to success.
- Make It a Habit: The trick is to make these check-ins a habit. The more you do it, the more natural it feels. Before you know it, keeping tabs on your budget will be just another part of your routine.
It’s all about being in control and ready to adapt – because when it comes to money, being proactive is always smart.
Fast Track to Your Money Goals with the 60 30 10 Rule Budget
Feeling ready for a fresh financial start?
The 60 30 10 rule budget is your ticket to a calmer, more secure financial life. Whether that’s a cozy place to call your own, a worry-free future, or just the joy of treating yourself from time to time.
It’s all in your hands.
You can start shaping your financial future today. Just split your income using the 60 30 10 rule and watch how you get closer to your dreams. It’s about grabbing hold of your budget and steering it towards a future that’s bright and full of promise.
So, are you ready to take this leap?
It’s about time to start turning your financial hopes into reality.
Let’s get going and see where this journey takes us!
