The 30-30-30-10 Budget | What is it & Will it work for you?

It happened again. You started off the month with all your ducks in a row, and you were determined that this month was going to be the one where you started budgeting seriously, but it just didn’t happen. You’ve ended up with nothing by the next paycheck again.

If this sounds like you, then perhaps the 30-30-30-10 budget might be able to help you. What is the 30-30-30-10 budget?

The 30-30-30-10 budget is a method of budgeting which splits your income into percentages and how much of each percentage should be spent on each category. It typically works out to 30% for housing, 30% for necessities, 30% for financial goals and 10% for personal spending.

The 30-30-30-10 budget is generally a good budgeting system for many, many people. It could help you in your financial situation. Let’s discuss who it’s right for, and it may give you the guidance you need to decide if it’s right for you.

Crop anonymous financier planning budget writing numbers in notebook

Is The 30-30-30-10 Budget Right For Me?

The 30-30-30-10 budget can be a great budgeting system for some people because it’s easy for those who find budgeting quite complicated and want to take account of some money to spend on fun things, so that splurging on entertainment or a meal out isn’t a failure of the budget but all part of the plan!

Like a diet, a budget only works if you stick to it, but also allow for a little ‘cheat day’ every now and again to keep the spice in our lives. Without structure though, people can take their cheat days too far. If you are the kind of person who finds yourself spending money you really should be saving, then this method could really help you.

It is also good for those who want to prioritize financial goals when they decide on how to spend their money. If you want to build up savings quickly, for whatever goal you’re aiming for, then this method will be just right for you.

Is The 30-30-30-10 Budget Wrong For Me?

This is obviously a great budgeting method, and can do absolute wonders for some, but not everyone’s financial situation is the same, and we have to acknowledge who it might not be so good for. 

The first kind of person that it might not be good for are those in high cost of living areas. When you think of truly expensive cities, such as:

  • London
  • New York
  • Tokyo
  • Hong Kong

Or any city of that caliber, then spending only 30% of your income on housing – that is to say, rent or mortgage – is just unrealistic. It might just be unavoidable in areas like that.

On the other end of the spectrum, if you’re more financially comfortable, then spending only 10% of your income on yourself may be unnecessarily frugal. If you can look at your budget, account for the cost of housing, necessities and still genuinely have spent less than 60% of your income on those both, then there’s no reason to not spend a little more. 

What If 30-30-30-10 Doesn’t Work For Me?

So, maybe 30-30-30-10 isn’t right for you. That doesn’t mean that budgeting, or even percentage budgeting, can’t work for you. 

For example, if you’re having trouble with four categories, why not just have two? The 80-20 budget, based on the Pareto Principle which claims 80% of results come from 20% of efforts, suggests you split needs and wants into a nice round 80% whilst leaving 20% to savings. 

This can be good for those who feel restricted by four firm categories, and therefore prefer a general guideline to help them on their way, rather than the chokehold of a tighter system. Let’s be honest; you need a budget that suits the way you think as a person, and if you’ve never been strict on numbers before, your budget is not the place to try and force yourself into it.

On the other hand, if 80-20 might leave you a bit too much wriggle room for overspending, but the 30-30-30-10 seems unreasonable, then maybe the 50-30-20 budget is better for you. In this one, 50% covers needs, 30% covers desires and 20% into savings. 

But like we’ve said; pick what’s right for you. If you are someone who needs the crack of the whip in the form of firmer numbers in order to keep on track, then 30-30-30-10 might do the trick. If having such a strict set of numbers to stick to isn’t going to do it, then the 80-20 might give you the leeway you need. Whatever budgeting method you pick, it needs to be one that you can work with, or else you’re just going to abandon it soon enough.

How Does The 30-30-30-10 Budget Work?

So, if you’ve decided you want to give it a try, you have some financial goals you want to see realized, such as:

  • Starting a business
  • Wedding fund
  • College fund
  • Home down payment
  • Paying off debt

If any of those sound like things you’d like to use 30-30-30-10 to achieve, then here’s a quick, simple explanation on how to make it happen.

Calculate Your Income

This is the first and most important step – you need to know exactly how much you’re making before you can split it up. If you’re salaried, then there’s a good chance that it’s the same each month, but if you happen to be self-employed, or hourly, then it might be a little tougher to figure out.

Best advice for inconsistent incomes is to choose the lowest income you would make in a month and calculate from that. If you do this, then on higher-than-average months, you could have a little extra in your pocket (Always nice!) but if you make the lowest possible, you’re still not caught short.

Calculate Expenses

You probably guessed this was next. The best way to do this is to comb through all your credit card or bank statements for a few months and document everything you buy, including one-off frivolities. This will give you a basic idea how much you spend in each category.

Split Expenses Into The Correct Categories

No cheating in this area! Not all the food you buy, you’ll die without – let’s be honest here! Split everything into wants and needs, and make note of the things that perhaps you could do without so that building savings will be easier.

Calculate Your Goals.

If you’re hoping to start a business with the money saved, how much is that going to cost? How much do you need to get out of debt? Knowing the exact numbers will not only make everything clearer, but it can also act as good motivation to keep going with the budget, since watching your savings climb high enough to reach your goal has to be satisfying.

Finally, Act On Your Calculations Through Spending

You’ll most likely uncover what things can be cut to save some money through this process, but it’s all for naught if you shock yourself with how much you spend at restaurants – and then continue to eat breakfast, lunch and dinner there. Just remember that it can take a while to adjust to spending the correct amount, and if you’re not there overnight, then it’s not necessarily on you. 

In Conclusion

The 30-30-30-10 budget is a method of budgeting through the percentages of income – 30% to housing, 30% to needs, 30% to savings and 10% to wants. It can be a fantastic way to build up savings for those able to reliably only spend 30% on housing and if you can calculate income, expenses and goals, then it can be a perfect tool to help you build up your savings and reach your financial goals in no time.

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Kristen is the founder and content creator at Mom Managing Chaos where she teaches busy moms how to simplify and organize their life and finances. She writes about frugal living, budgeting, productivity and organization.