Yusra3
VIP Contributor
The 60 30 10 rule is a budgeting method that helps you save money and make your life easier. It's based on the idea that you should spend no more than 60% of your income on basic necessities, such as food, housing, transportation and utilities; 30% of your income should be spent on luxuries; and 10% can be spent on fun stuff like vacations or new clothes.
This method can be used to get a better handle on how much you're spending on things like rent or groceries, so you can make adjustments if necessary.
Say, for example, that you make $100,000 a year. If you want to budget $30,000 for vacations and $60,000 for savings and investments each year, then you would use the 60/30/10 rule.
The first number the percentage of your income that goes toward spending is 60 percent. So if your income is $100,000 and your expenses are $30,000 per year, then 60 percent of your income will go toward expenses (like rent and food). The second number is 30 percent of your income that's how much should go toward saving and investing. So if after taxes and savings you have $60,000 left over each year (or less than 70 percent), then that's what should be saved up for investment returns (and not spent on vacations). The third number is 10 percent that's how much can be spent on fun stuff like going out to dinner with friends or buying clothes!
This method can be used to get a better handle on how much you're spending on things like rent or groceries, so you can make adjustments if necessary.
Say, for example, that you make $100,000 a year. If you want to budget $30,000 for vacations and $60,000 for savings and investments each year, then you would use the 60/30/10 rule.
The first number the percentage of your income that goes toward spending is 60 percent. So if your income is $100,000 and your expenses are $30,000 per year, then 60 percent of your income will go toward expenses (like rent and food). The second number is 30 percent of your income that's how much should go toward saving and investing. So if after taxes and savings you have $60,000 left over each year (or less than 70 percent), then that's what should be saved up for investment returns (and not spent on vacations). The third number is 10 percent that's how much can be spent on fun stuff like going out to dinner with friends or buying clothes!
