💵 70/20/10 Rule Calculator

Calculate your budget using the 70/20/10 money management rule

Monthly Income ($)

Your total monthly take-home income

How to Use This Calculator

Enter Your Monthly Income

Input your total monthly take-home income (after taxes). This should be your net income, not gross income.

Click Calculate

Press the "Calculate Budget" button to see how your income should be allocated according to the 70/20/10 rule.

Review Your Budget Allocation

Review the calculated amounts for expenses (70%), savings (20%), and investments (10%). Use these amounts to create or adjust your monthly budget.

Implement and Track

Compare your actual spending and saving to these recommendations. Adjust as needed to align with your financial goals and priorities.

Formula

Expenses = Income × 0.70

Savings = Income × 0.20

Investments = Income × 0.10

Example Calculation:

If your monthly take-home income is $5,000:

• Expenses (70%): $5,000 × 0.70 = $3,500

• Savings (20%): $5,000 × 0.20 = $1,000

• Investments (10%): $5,000 × 0.10 = $500

• Total: $5,000

About 70/20/10 Rule Calculator

The 70/20/10 rule is a money management framework that divides your after-tax income into three categories: 70% for expenses, 20% for savings, and 10% for investments. This rule is particularly popular among those who want to balance current lifestyle needs with future financial security through both savings and investments. It's a variation of budgeting rules that emphasizes building wealth through investments in addition to traditional savings.

When to Use This Calculator

Budget Planning: Create a budget that balances expenses, savings, and investments
Wealth Building: Ensure you're allocating funds for long-term investment growth
Financial Review: Evaluate your current spending and saving habits against this framework
Goal Setting: Determine how much you can allocate to savings and investments each month
Investment Planning: Plan your monthly investment contributions

Understanding the Categories

70% - Expenses (Living Costs)

All your monthly living expenses including:

Housing (rent or mortgage)
Utilities (electricity, water, gas, internet)
Food and groceries
Transportation (car payment, gas, public transit)
Insurance (health, auto, home)
Healthcare costs
Entertainment and dining out
Debt payments (minimum payments)
Other monthly expenses

20% - Savings (Financial Security)

Money set aside for security and goals:

Emergency fund contributions
Short-term savings goals (vacation, down payment)
Debt repayment beyond minimums
Retirement savings (401k, IRA)
Health savings account (HSA)
Other savings accounts

10% - Investments (Wealth Building)

Long-term wealth-building investments:

Stock market investments (individual stocks, ETFs, mutual funds)
Bond investments
Real estate investments
Business investments
Other investment vehicles
Long-term wealth accumulation

Why Use Our Calculator?

✅ Simple & Quick: Get instant budget allocation in seconds
✅ Wealth Focus: Ensures you're investing for long-term growth
✅ Balanced Approach: Balances current needs with future security
✅ Clear Guidelines: Understand exactly how much to allocate to each category
✅ 100% Free: No registration or payment required

70/20/10 vs. 50/30/20 Rule

70/20/10 Rule: Emphasizes wealth building through investments. Separates savings (security) from investments (growth). Better for those who want to actively build wealth.

50/30/20 Rule: Separates needs from wants. Combines savings and debt repayment. Better for those focused on debt reduction and basic savings.

Tips for Success with the 70/20/10 Rule

Use Take-Home Pay: Always calculate based on your after-tax income
Prioritize Emergency Fund: Build 3-6 months of expenses in savings before focusing heavily on investments
Automate Investments: Set up automatic transfers to investment accounts to ensure consistency
Review Regularly: Adjust allocations as your income and goals change
Diversify Investments: Don't put all investment funds in one asset class
Track Expenses: Monitor actual spending to ensure you stay within the 70% limit
Start Small: If 10% for investments seems too much, start with 5% and gradually increase

💡 Important Note: The 70/20/10 rule is a guideline. If you have high-interest debt, consider allocating more to savings (debt repayment) before investing. Similarly, if you live in a high-cost area, your expenses might exceed 70%. Adjust the percentages to fit your personal circumstances while maintaining the principle of balancing expenses, savings, and investments.

Frequently Asked Questions

What is the 70/20/10 rule?

The 70/20/10 rule is a money management framework that allocates 70% of your after-tax income to expenses, 20% to savings, and 10% to investments. It's designed to help you balance current lifestyle needs with future financial security through both savings and investments.

What's the difference between savings and investments?

Savings (20%) are typically low-risk accounts like savings accounts, emergency funds, and short-term goals. Investments (10%) are higher-risk, higher-return vehicles like stocks, bonds, and real estate designed for long-term wealth building. The key difference is risk and time horizon.

Should I use gross or net income?

Always use your net income (take-home pay after taxes). The 70/20/10 rule is designed to work with the money you actually receive in your paycheck.

What if my expenses exceed 70%?

If you live in a high-cost area or have significant essential expenses, your expenses might exceed 70%. You may need to reduce your savings or investment allocation, find ways to increase income, or reduce expenses. The rule is a guideline that can be adjusted to fit your situation.

Can I invest more than 10%?

Absolutely! If you have your emergency fund established and are comfortable with your savings, investing more than 10% can accelerate wealth building. Just make sure you're not neglecting essential expenses or emergency savings.

Should I invest if I have debt?

It depends on the interest rate. If you have high-interest debt (credit cards, payday loans), prioritize paying it off first. If you have low-interest debt (mortgage, student loans), you might invest while paying it off. Many experts recommend paying off high-interest debt before investing.