The 30-30-30-10 budget is the key to saving without FOMO

Are you ready to take control of your spending but don’t know where to start? The 30-30-30-10 budget may be the perfect solution.

This percentage-based budgeting plan is simple and straightforward. It provides structure and flexibility, so it doesn’t feel like a prison sentence. Plus, it emphasizes savings and debt reduction, so you will reach your financial goals faster than with other plans.

This article will demonstrate how easy it is to manage your finances with the 30-30-30-10 budget. So whether you’re an experienced budgeter or a complete newbie, you can reign in your spending and still enjoy a balanced life.

What Is The 30-30-30-10 Budget?

The 30-30-30-10 budget is easy to set up and put into practice. Unlike more complicated, time-consuming budget plans, you only need to divide your income into four categories:

  • 30% is for housing. This includes rent or mortgage payments, insurance, property taxes, maintenance, and anything else related to your home.
  • 30% is for necessities, such as groceries, utility bills, internet, fuel, and monthly debt payments. This category includes the expenses that you absolutely cannot live without.
  • 30% is for financial goals, like debt reduction, savings, and investments. If you have any debt, allocate this 30% toward reducing your balance. Once that is complete, you can begin saving for long-term goals such as retirement.
  • 10% is for having fun. This includes dinners out, travel, new clothing, entertainment, and other leisure activities. This is the portion of your budget that allows you to have fun without feeling restricted or guilty.

Who Should Use The 30-30-30-10 Budget?

Budgets are beneficial for everyone regardless of income — are you listening, Elon?

But not all budgets are created equal. So how do you determine if this plan is right for you or if there’s a better option?

The 30-30-30-10 budget is ideal if you need help controlling your spending. It can help provide structure if you:

  • Regularly tap into your credit card to make ends meet
  • Want to eliminate debt and increase savings
  • Prefer to separate your housing costs from other expenses

And with its easy-to-follow formula, this budget is perfect if you’re new to budgeting or want a plan that’s simple to set up and follow.

Who Shouldn’t Use The 30-30-30-10 Budget?

Although the 30-30-30-10 budget is great for most people, there may be situations when it won’t be the best fit.

For example, in high-rent cities like New York, San Francisco, or Miami, it may make it challenging to keep your housing expense below 30%. In that case, consider adjusting the housing spend to 35% and reducing your “needs” category by 5%

Or if you’re already on your way to fat FIRE and prefer to have more available for your “wants” — you can increase that budget to 15% and reduce your savings by 5%.

Lastly, the 30% savings rate may feel high for low-income families or folks just starting out. In this case, housing and basic needs may take up a larger portion of your take-home pay.

But don’t despair. 

The beauty of this budget is its flexibility. Feel free to use it as a rule of thumb, and then tweak the categories to fit your financial situation. The key is to only spend within your limits once you establish them.

How To Set Up The 30-30-30-10 Budget In 3 Easy Steps

Step 1: Set Financial Goals

One significant advantage of this budget is that it allocates nearly a third of your after-tax income toward your financial goals.

So the first step is to determine what those goals are and put them in writing. Some worthwhile goals to consider include:

Next, post these goals in a place where you will see them every day. Use this constant reminder to keep you motivated and on track. And when FOMO rears its ugly head, you can reduce the stress by focusing on what you will have rather than what you are missing.

Step 2: Calculate Your Net Income

The next step is calculating your monthly net income (after taxes). If you receive a steady paycheck, this part is simple. Just review your pay stubs to determine the amount.

However, if part or all of your income comes from tips, bonuses, commissions, side gigs, or self-employment, you’ll need to do a little more math to come up with an average.

One straightforward method is to take what you earned last year and divide it by 12. This works well if your income is consistent, with only minor fluctuations throughout the year.

If not, you will need to set money aside during the better months to cover times when your income falls below the average. An excellent way to do this and reduce the temptation to overspend is to transfer any excess to a separate high-yield bank account. Out of sight, out of mind!

Or, even simpler, you can use your lowest month in the past year to calculate your budget. That way, you should be covered no matter where your income falls. And during the higher months, you can allocate more to your needs, wants, and savings.

Step 3: Categorize Your Expenses

Now it’s time to review your spending. Some expenses, like rent and insurance, are consistent and easy to predict. However, variable expenses (those that can change each month) can be trickier. For these costs, like dining out and entertainment, it is best to have your credit card and bank statements for the past three to six months on hand.

First up, housing. This category includes your rent or mortgage payment. If you rent, it also includes your renter’s insurance. If you own, be sure to include property taxes and homeowners’ insurance if they aren’t already bundled into your mortgage payment.

Next, using your statements, break out the rest of your expenses by category — needs, wants, and financial goals.


Your needs may include the following:

  • Insurance payments
  • Utility bills (gas, electric, water)
  • Cell phone bill
  • Car and home maintenance
  • Gasoline
  • Groceries
  • Clothing (within reason)
  • Doctor visits
  • Child care (if applicable)


Your wants, on the other hand, consist of:

  • Dinners out
  • Entertainment
  • Monthly subscriptions (like Netflix and Amazon Prime)
  • Birthday and Christmas gifts
  • Travel and vacations
  • Any miscellaneous spending, like Starbucks or happy hours with co-workers

For any expenses that vary significantly from month to month, try to come up with a reasonable average.

Also, pay special attention to those expenses that can fall into both categories. For example, we all need to eat, but not all of our grocery expenses may be necessary. And if your work requires a uniform or special clothing, that would fall into the needs category. Whereas, designer jeans are definitely a want. Be honest as you evaluate your expenses, but ultimately, it’s up to you where each one goes.

Financial Goals

Lastly, for your financial goals, consider the following:

  • Credit card debt
  • Loan payments
  • Retirement account contributions, like IRAs or 401Ks
  • Savings goals, like an emergency fund or house down payment

After you have all these historical expenses categorized, calculate the percentages for each relative to your income. Where do you fall? If you are in line with your budget, pat yourself on the back! You’re pretty much done.

However, if your current spending doesn’t quite fit your desired budget, this is your opportunity to do some adjusting. Typically, this means you have been falling short in the financial goals category. If that is the case, review your expenses more closely and see where you can make cuts.

You may not get there overnight. But by making a few simple changes, you will be surprised how quickly you can reach your financial goals. Even without giving up all the fun!

30-30-30-10 Budget: A Quick Example

To help you calculate your budget, here is an example using the average monthly income in the U.S. as of 2023. Below each category, you will see sample line items for common expenses and how you could choose to allocate extra funds. 

Monthly income= $4,295 net of taxes

Housing = $4,295 x 30% = $1,288

Rent: $1,200

Renters’ insurance: $50

Total: $1,250

Since these costs are fixed, you can apply the remaining $38 to another category.

Needs = $4,295 x 30% = $1,288

Groceries: $550

Gasoline: $125

Car Payment: $250

Car Insurance: $75

Cell Phone: $75

Utility Bills: $150

Total: $1,225

This leaves $63 to $101 monthly for things like car maintenance, doctor’s visits, and necessary clothing.

Financial Goals = $4,295 x 30% = $1,288

401K contributions: $450

Extra car payments: $100

Savings: $300

IRA contributions: $200

Saving for vacation: $238

Total: $1,288

Wants = $4,295 x 10% = $430

Dining out: $150

Netflix: $20

Movie night: $75

Starbucks: $60

Total: $305 

This leaves $125 for gifts, impulse purchases, and miscellaneous expenses.

Benefits Of The 30-30-30-10 Budget

The 30-30-30-10 budget offers benefits you won’t find with other plans. Here are some key takeaways when using this style of budgeting.

  • Simple to set up and use: With only four primary categories, this budget is easy to understand, implement, and stick to.
  • Reach your financial goals faster: With almost one-third of your after-tax income going to debt reduction and savings, you will be in the fast lane toward financial freedom.
  • Breaks out housing and needs: By keeping these categories separate, it is easier to identify where you might be able to reduce expenses.
  • Increases discipline: This budget controls impulse buying by bringing awareness to your discretionary spending habits.
  • Teaches you how to live within your means: By allocating a specific amount for each category, the 30-30-30-10 budget helps you make adjustments and find ways to save money in areas where you may be overspending.
  • Reduces anxiety associated with FOMO: With a clear plan for your money, you can feel more confident in your financial decisions and less pressure to keep up with others. And this, in turn, helps to prevent lifestyle inflation.

Other Popular Budgeting Ideas

There is no perfect budget — and one budget doesn’t fit all. So if the 30-30-30-10 budget plan isn’t for you, here are a few other popular plans worth considering:

The 50-30-20 Budget

Popularized by Senator Elizabeth Warren and her daughter in their book, All Your Worth: The Ultimate Lifetime Money Plan, this budget is built on the same principle as the 30-30-30-10 budget. However, in this case, you only need to divide your income into three categories.

  • 50% for needs (includes housing)
  • 30% for wants
  • 20% for financial goals

This budget is more restrictive on needs (50% instead of 60%). And it is also more flexible on financial goals (20% instead of 30%). These changes allow for more spending on wants, fun, and entertainment. Due to this more relaxed approach to financial goals, the 50-30-20 budget is probably most appropriate for those without debt or dreams of FIRE.

The 60-30-10 Budget

You may never look at budgeting the same way again! In this budget, a whopping 60% of your take-home pay goes toward your financial goals. Then, 30% is allocated to your needs (including housing) and 10% is for having fun.

This budget is all about achieving financial independence — and right now! However, the 60-30-10 plan is probably out of reach for most families. Saving 60% of your income is only feasible for high-income earners with relatively minimal housing expenses.

The 80-20 Budget

A simplified version of the 50-30-20 plan, this budget divides your income into two categories: savings and everything else.

  • 20% for savings
  • 80% for everything else

The theory with this budget is that as long as you pay yourself first, it doesn’t matter where the rest of your money goes. No calculations. No categories. Quick and easy.

This budget appeals to folks who want to spend less time pouring through their finances. Or those who prefer the month-to-month flexibility to decide where to spend their money.

However, if you lack the discipline to consistently set aside 20% of your monthly income before paying your other bills and spending elsewhere, this plan may not be the best choice.

Final Thoughts

If you’ve been looking to reign in your spending and make progress toward your financial goals, the 30-30-30-10 budget is certainly worth a try.

In less time than it takes to watch an episode of Billions, you can have your budget set up and ready to go. After all, everyone talks about financial independence. Won’t it feel great to actually have a plan to get there?

As you get started with the budget system, don’t worry if you don’t quite hit the 30-30-30-10 mark right away. Lifestyle and spending habits take time to change.

Just start with little steps in the right direction. Then, have patience; before you know it, you’ll be well on your path to financial independence. And FOMO will be a thing of the past.

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