Is the 60/30/10 Budget Rule Replacing the 50/30/20?

Excerpt from US News and World Report
Jessica Walrackf
Apr 19, 2024

The 60/30/10 budgeting method has been gaining popularity lately, but is it a wise approach?

Jenny Groberg, the founder and CEO of BookSmarts Accounting and Bookkeeping, said that she finds the trend concerning. While it may help you today, it could put your future at risk. Here’s a closer look at why.

What Is the 60/30/10 Budgeting Method?

The 60/30/10 budgeting method involves allotting 60% of your monthly income toward your needs, 30% toward your wants and 10% toward your savings.The format may look familiar as it follows the same structure as the long-standing 50/30/20 budgeting method. However, the key difference is it moves 10% from the “savings” bucket to the “needs” bucket.

“People may be unable to use the 50/30/20 budget right now because their needs are more than 50% of their income,” Kendall Meade, a certified financial planner at SoFi, said. While that can be OK for a period, she urges people to try and get close to the 50/30/20 framework over time. “That 10% may not be enough to achieve your goals like retirement, down payments, etc.,” she said.

Groberg gave a similar warning. “This trend concerns me because people will never be able to save for homes, for retirement, for unforeseen medical or other emergent problems.”

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