70-20-10 Rule Money Calculator

[Ellyn Krucke]

Yourutility bills may decrease during more temperate seasons of the year and go up during extreme cold or heat. Variations may be due to your spending choices but sometimes are due to factors outside your control.

The key to remember for all of your expenses is to keep the total at or below 70% of your total take-home pay in any given month. If you have any extra leftover, you can decide whether to spend it as fun money or send it to pad your savings or giving category.

401(k)s offer the opportunity to save for retirement before taxes. The money goes directly from your paycheck into an investment account, reducing your taxable income. Some employers even offer 401k matching for your contributions, which is basically free money!

Along with a 401(k) or similar employer-sponsored plan, many people in the U.S. can save in an Individual Retirement Account (IRA). There are traditional IRAs, in which you can save yearly for tax-deductible contributions.

Roth IRAs are another option, which works similarly. The difference between traditional and Roth IRAs is that the Roth IRA is taxed upon contribution, but you can withdraw the money tax-free once you retire.

You can try your hand at more stock investing by signing up with a robo-advisor, which picks your bundle of stocks to buy based on the information you give them. You can check out the best stock research websites to invest money in the stock market.

Another means of getting some money into the stock market is with index funds. Investing with index funds is a way of investing in a basket of stocks or bonds that are meant to perform similarly to the overall stock market.

In the 70-20-10 budget, the final 10% of your money is earmarked for extra debt payoff. Or you may choose to use this 10% for giving. It may mean donations to charity or gifts to loved ones for weddings, graduations, and the like.

The magic of the debt snowball is that you start with the smallest of all your debts, no matter what the interest rate is. That may mean paying off a $75 parking ticket first. That may be small, but that gives you a feeling of accomplishment.

With the debt avalanche, you want to look at all of your debts and check the interest rate on each one. Then, focus any extra money you can on paying off the highest-interest debt first. For many people, this is credit card debt.

However, you might grow discouraged if it takes a long time to pay off your highest-interest debt. Which debt reduction strategy to use can depend on your personality and what method will help you to succeed.

A part of your final 10% category can go towards giving to something meaningful to you. It can be a formal type of giving, with regular monthly amounts to the same organization, or you might like to vary your giving monthly.

Spending, saving, and giving are generally the three main categories people talk about when discussing why personal finance is important. Sure, there are plenty of ways to divide up those areas, but starting from those broad sections might make budgeting feel manageable to you.

A budget like this might work for you because it can feel less restrictive than other budgets. Other budgeting tools or programs may require you to make thirty different categories for your money and keep track of every single penny you spend.

This budget gives you a general framework that can help you with organized finances. But it gives you a lot of freedom within the framework. Spending 70% of your income, you can divide up the spending categories any way you like.

You may have read the above section and thought the 70-20-10 budget is just too simple for you. You may prefer breaking down all of your income and spending in a much more detailed and specific manner.

Going through your current financial situation can help you to create a financial planning process. Your money is too important to leave up to chance, so give it a shot and try some new budgeting ideas.

When I work with families or individuals, an overwhelming issue Freebs want help with is figuring out, based on their income, how much money to spend versus save. They want to know how to be able to afford vacations and FUN while still paying bills and being financially responsible.

For us, until a few years ago, we wouldn't possibly have been able to live off of less than 70% because we made so little. I understand that so many of you are in that same situation and it's a huge trial. I've been there.

Expenses include EVERYTHING you spend money on, including (but not limited to): bills, utilities, emergency or unexpected expenses, shopping (this includes Amazon), groceries, take out, you name it. If you spend money on it, it's considered an expense.

Don't have a credit card or bank statements because you pay cash for everything? That means you don't have accurate record of all spending, so you'll need to start tracking EVERY DIME you spend for the next 3 months. Electronic is really the easiest, though. Don't like credit cards? Use a debit card, it's basically like cash!

You want to make sure you're tracking everything and know what categories you're spending the most on! I really, really, really recommend using a debit card. Once you have a handle on it, you can go back to cash!

What if no matter what you do, you can't get it to fit within 70%? Get real with yourself and make it happen. Sell your car. Move to a cheaper house. Cut your cable. Get a better paying job or make more money at work. Start a side hustle.

Sorry to break it to you guys, but if you're spending too much, you're spending too much! I'm tough love here because Bubba and I did sell our car. We did cut cable. We stopped eating out entirely. I stopped getting my hair cut professionally. We did it!

Dave Ramsey won't like this, but I don't necessarily believe that everyone should make paying off their house an absolute priority. Why? Because for Bubba and I, it wasn't even close to an option for the first 8 years of our marriage.

I do think you can be very smart about it. Pay extra toward principle, refinance to get a better interest rate, buy a home that allows you to keep all spending to 70% or less of your income. But do we need to sink every dime we have into paying off a house? Not in my book.

You need to be your own judge and decide if a car loan is considered pressing debt in your house. Cars are weird for us because they are a business expense, so I'm not going to answer that one for you. Just make sure that any car payments fit easily in your 70% range if you get or have a car loan.

If your current financial situation can't support setting a solid 20% aside each month, that's okay! Do your best to get on your feet financially, put away as much as you can, then increase the percentage as you can spare it as time goes on.

Remember, as mentioned above, you don't have to limit yourself to 10%! Just be sure to set aside AT LEAST 10%, no matter your income. For us, we wouldn't have been able to afford more than 10% for years, but now we can.

So now you know all about the budget percentages and how to make them work on any budget, what are you waiting on? Keep up with us on social media to get even more great budgeting tips! I share a lot on my personal Instagram account, Fun Cheap or Free Instagram, Facebook, and Pinterest!

OK, so not to get into a doctrinal debate, but my tithing comes out to be more like 13% than 10% because we pay tithing on what we make before taxes, insurance, retirement, etc. Also would fast offering be part of this or the 70% expenses? Thanks.

its simply called paying it forward and it does come back to you, test me on this, or test him on this. I am someone that squeaks when it comes to money, but the chance came up to test the word and I found it to be true give, and you receive to give again and be more helpful.

What do you do to tithe 10% AND invest and save for college? For example, do you invest with one of your 10% savings accounts? Is a portion of your family savings account dedicated to saving for college? Thx!

For us, this is new because finances have been so tight for so long, all we could really spare was the 70/20/10 formula. But now that we are in abundance mode, we take from the 70% and put it toward investing, retirement, and college. Just take the general percentage idea and make it work for you! Hope that helps!

Thank you for this!! My husband is about to complete his MBA program and I am a little stressed about organizing finances and paying off debt. This is SUPER helpful to get us started out on a good path with a real income.

I have heard of the 70% rule many times before but I love how simple you make it and how you break it down. After I watched your video, I immediately implemented it into our budget along with simpler categories. Thank you!

Question..if I have $ automatically going to a credit union acct plus retirement money drafted from my check, and husband has 401k drafted from his check, do those count as part of the 20% savings? This has been a real point of confusion for me. Thanks so much..

Hi my question is in regards to debt, i have a loan i got at a great interest rate, the cost of me to get out of the loan early will be more money than the interest i will pay over the life of the loan is this worth paying it off, it seems silly to pay 100+ extra dollars to get out early.

hi ,

We have almost the same history, last year we had almost lost our house because my husband was laid off and I was 7 1/2 months pregnant. we tried, to make someone win our house through a contest, but nobody trusts anyone anymore, so the contest failed, which was to bad, because someone could have won our house for $ 30 !

well, fortunatly my husband finally found temporary job that helped us a little but we were still losing our house, and because of the oil price in Alberta, unemployment was increasing, and many electricians were looking for work, and the house market was very very slow

Finally my husband opened his business. and thanks to him our house is saved !

We will still try to sell the house in spring to get closer to Calgary, but at least if we do not find a buyer at the right price, we will not have to sell it off.

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