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The 70/20/10 budget

The 70/20/10 rule breaks down your budget into 3 simple categories: 70% for all your spending needs, 20% for savings, 10% for debt repayment,additional investments .

When you are creating your budget please ensure to use  your monthly after-tax income. In other words your Net Income.

70% – of your income: Spending. All and everything that you spend on a monthly basis.

These spending items may include:

  • Housing
  • Food
  • Transportation
  • Utilities
  • Insurance
  • Minimum debt/loan payments
  • Child Care expenses
  • Monthly subscriptions
  • Travel
  • Entertainment
  • Meals Out
  • Shopping


20% – of your income: Savings. The 20% should be broken down to 10% family savings and 10% Short and long-term savings. You can also break it down further. For example 10% Long-term, 5% – Emergency Fund, 5% family savings. Some items that can be utilized in this area are:

  • Retirement
  • Saving for a family vacation
  • Emergency Fund
  • New furniture
  • Unexpected expenses(Christmas gifts, birthdays)


10% – of your income: Debt/Investment/Education. The final 10% is for additional debt payments, further investments specifically in the market, more risky investments.(based on your risk tolerance). Additional future education savings for your kids. If you are currently in debt, I would recommend using this full 10% for that purpose.