The New 60/30/10 Budgeting Method

In today’s inflated economy, the 60/30/10 budgeting method could be a better option for your financial situation than the traditional 50/30/20 rule.

Life expenses symbols with pie chart floating in air.
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As inflation strains an increased number of household budgets, many financial advisors are finding that the 60/30/10 budgeting method is a better fit for many households than the long-standing 50/30/20 budgeting model. The 50/30/20 rule, created by U.S. Senator Elizabeth Warren in her book All Your Worth: The Ultimate Lifetime Money Plan, has been a gold standard for budgeting since 2006. The method advises individuals to allocate 50% of their income towards necessities, 30% towards “wants” and 20% towards savings and paying down debt. However, many individuals may find that 50% of their income just isn’t enough to cover all necessary expenses. This is why the new model can work better for a growing number of individuals who spend a higher portion of their monthly income on necessities. 

For example, according to the U.S. Census Bureau, the number of cost-burdened (when a household has a cost ratio of over 30%) renter-occupied households was 20.1 million in 2021, an increase of around 1 million households since 2019. Additionally, the number of severely cost-burdened households (when a household has a cost ratio of over 50%) was 10.4 million in 2021, up from 9.4 million in 2019.

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Erin Bendig
Personal Finance Writer

Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.