17 Mar, 2023

Will The 30/30/30/10 Budget Rule Work For You - The Full Guide

Will The 30/30/30/10 Budget Rule Work For You - The Full Guide
Written by: - Phil Baker

Managing your personal finances is incredibly important, and if you want to do this, the best thing to do is to find a budgeting rule that works for you. There are a lot of different budgeting rules out there, but today we’re focusing on the 30/30/30/10 Budget Rule

This budgeting rule is a fairly popular one, and that is because it works by segmenting your income and dividing it into different categories. Each category will be given a label and your money will then be used for that category. 

Before you give the 30/30/30/10 budget rule a go, you might want to know if this budgeting rule will work for you. In this guide, we’ll be taking a look at just that. 

So keep on reading to find out if this is a rule that would suit your needs! 

Also read: How To Calculate Retained Earnings?

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What is the 30/30/30/10 Budget Rule?

First things first, let’s take a look at what the 30/30/30/10 budget rule is. Well, as we have established, this budgeting rule is an incredibly popular one that has been used by many people. But what does it consist of? Let’s take a look.

The 30/30/30/10 budgeting rule requires you to divide your income between 4 categories: housing, necessities, financial goals, and wants. 30% of your income will go toward housing, 30% will go toward necessities, another 30% will go towards financial goals, and the final 10% will go towards your “wants”. These categories can sometimes be a little tight, which is why these categories will not work for everyone. 

In order to calculate how much of your income will go in each category, you need to calculate what 10% of your monthly income is. Thankfully this is an easy calculation. Simply divide your monthly income by 10, and this will tell you what 10% is. So, if you bring home $2,700 each month, $270 will be 10%. Simply multiply this by 3 to calculate what 30% is and then split your income by this. 

So, for example, if you bring home $2,700 a month – $810 will go towards housing, $810 will go towards necessities, $810 will go towards financial goals, and $270 will go towards your wants. But what fits into each category? Let’s take a look. 

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This first one is fairly self explanatory. Housing is one of the largest expenses that any household has, and it will include either your rent or your mortgage payments. 

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The next category is made up of necessities, and this is very similar to anything that includes your “needs”. Things such as utility bills, food bills, and costs associated with things that you need in order to live are necessities. 


Financial Goals

Another category to consider is the “financial goals”. The money in this category will go towards achieving your financial goals. So, it can cover a variety of different things, including paying off debts, putting money towards retirement, and savings (including sink funds and emergency funds). 



Finally, your wants will consist of anything that you want but do not need. This will include things such as new clothes that aren’t essential, subscription services for entertainment, eating out and take aways. 

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Will the 30/30/30/10 Budget Rule Work For You?

Now that we have taken a look at what the 30/30/30/10 budget rule is, let’s take a look at whether, or not, it will work for you. As we have established, there are lots of different types of budgeting rules out there, and not all of them will work for everyone. So who is the 30/30/30/10 budget rule made for?

Well, ideally, the 30/30/30/10 budget rule is made for you if you live in a relatively low-cost area. This rule simply doesn’t work for those who live in areas that have high costs of living, and that is because only 30% of your income should be spent on housing using this rule. So, if your housing costs exceed this, then this budget rule is not appropriate for you. 

In addition, if you are somebody who has a low amount of outgoing monthly payments, and want to spend more money on treating yourself, then this rule isn’t ideal. As we have said, this rule requires you to spend just 10% of your income on wants, so this doesn’t really give you much room to play with. 

However, if you are somebody who wants to bring structure to your personal finance, then this budgeting rule could be perfect. It is a strict rule, and it can really make you question the difference between things that you want, and things that you need – this can really help reduce any unnecessary spending. So, if you are looking for a strict budgeting rule, this is perfect for you! 

Also read: The 8 Amazing Passive Income Ideas With Little Money


Pros and Cons of the 30/30/30/10 Budget Rule

Finally, to help you decide if the 30/30/30/10 budget rule is the right option for you, let’s take a brief look at some of the pros and cons associated with this budgeting rule. 



  • Easily adds structure to your monthly spending

  • Can help you become more disciplined with your money. 

  • Reduce unnecessary spending. 

  • Great entry level budgeting tool as it is easy to understand. 

  • Build financial security in the future. 



  • Not appropriate for those living in expensive areas

  • Doesn’t work for those that have low amounts of outgoing payments. 

  • Not suitable for those who want to spend a large amount of monthly income on treating themselves. 



In short, whether, or not, the 30/30/30/10 budgeting rule will work for you really depends on your personal circumstances. If you live in a low-cost area, then this budgeting tool will work, but if you live in a city, you might find that it does not. So, before you decide to use this rule, take a look at your monthly outgoings to see if you can make it work. Your pay stubs will be a great resource to find out figures needed to calculate net income etc.

Also read: 8 Personal Finance Apps For Your Better Future

Thank you for reading!

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