One challenge you will face when budgeting is determining how much of your income to spend in different categories. Percentage-based budget rules, like the 50/30/20 rule or the 70/20/10 rule, are useful strategies that can guide your spending and help you organize a better budget. Below, we’ll run down some standard budgeting percentages you might want to try.
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Recommended Budget Percentages by Category
| Categories | Percentages |
| Housing | 25% - 30% |
| Food | 10% - 15% |
| Transportation | 10% - 15% |
| Utilities | 5% - 10% |
| Insurance | 10% - 25% |
| Savings | 10% - 20% |
| Personal | 5% - 10% |
| Medical | 5% - 10% |
| Entertainment | 5% - 10% |
| Giving | 1% - 10% |
| Miscellaneous | 5% - 10% |
Housing: 25%- 30%
Housing will account for a significant portion of most people’s budget. This typically includes your mortgage or rent payment, home insurance, HOA fees, property taxes, and home maintenance.
Food: 10% - 15%
The food category will include groceries, food delivery and eating out at restaurants. If you want to spend less of your income on food, try cooking more at home instead of eating out.
Transportation: 10% - 15%
Money that you spend on gas, car maintenance, and public transportation will go in the transportation category. Since you may not need to perform maintenance every month and gas prices change daily, the percentage of your income that you spend on transportation can change every month.
Utilities: 5% - 10%
Some examples of utilities include electric, water, gas, and internet. The amount of your income that you spend on certain utilities, such as water and electric, will vary every month since your bill will be based on your usage.
Insurance: 10% - 25%
Insurance coverage, such as health, car, home and life insurance, is typically a fixed expense that will stay the same every month.
Savings: 10% - 20%
The percentage of your income that you set aside for emergencies, retirement, and future goals will be under your savings category. If you are unable to save 10% to 20% of your income, you can save as much as you can afford to save now and increase this percentage later as your income increases or you find ways to reduce spending in other categories.
Personal Care: 5% - 10%
Things like clothes, gym memberships, and haircuts fall under the personal care category.
Medical: 5% - 10%
The amount of money that you spend on things like doctor visits, dental exams, and prescriptions will vary every month based on how often you need these services.
Entertainment: 5% - 10%
The percentage of your income that you spend on items such as movie tickets, hobbies, sporting events and concert tickets may change every month. If you need to reduce spending, you can look at items in this category first since they are considered non-essential.
Giving: 1% - 10%
Gifts to others and donations to charities will be under this category. The percentage of your income that you assign to this category can change every month based on how many occasions you will need gifts for and how often you donate to charities.
Miscellaneous: 5% - 10%
Any expenses you can’t fit into the other categories you have can go here. This can include fixed monthly expenses like daycare or irregular expenses like an annual subscription fee.
This section can also cover the overflow for expenses in other categories that you hit the limit for. For example, if you budget $150 for your electric bill for the month but your bill was $200, you can use the funds budgeted in your miscellaneous category to cover the difference.
Earmarking a certain percentage of your income for these miscellaneous expenses every month can help make sure you don’t go over budget.
Common Budget Percentages
50/30/20: Your paychecks get separated into three categories: 50% for needs, 30% for wants, and 20% for savings.
70/20/10: You allocate 70% of your after-tax income to your living expenses, 20% to savings and investments, and the remaining 10% to debt and donations.
40/30/20/10: You split your after-tax income into four categories: 40% for needs, 30% for wants, 20% for savings and debts, and 10% for donations.
60/30/10: Necessary living expenses take up 60% of your income after taxes, while your wants take up 30%, and 10% of your income goes to savings and paying off debt.
75/15/10: You separate your income after taxes with 75% going to your living expenses, 15% going to investments, and 10% going to savings.
60/20/20: Your paycheck after taxes gets split like this: 60% to needs, 20% to wants, and 20% to savings.
80/20: You allocate 20% of your after-tax income to savings, and the remaining 80% goes to everything else.
60/40: Fixed expenses, like insurance and your mortgage, take up 60% of your after-tax income, and the remaining 40% goes to savings and expenses that fall outside of your normal monthly spending.
How to Choose the Right Budget Percentages for You
Figure out how much of your income you’re spending on what.
Check your past bank and credit card statements for the last few months to see what you are spending your money on. Calculate how much of your income is going to these expenses.
You want to choose a budgeting percentage that can realistically fit your spending. For example, if your necessary expenses surpass 50% of your income, the 50/30/20 will not work for you. Instead, you should try a budget rule that allocates more of your income to necessary expenses, like the 70/20/10 rule or the 60/30/10 rule.
Determine what categories you want to prioritize allocating money to.
Certain budget percentage rules prioritize particular categories over others. For example, if you are looking to invest some of your income, the 75/15/10 rule allows you to allocate 15% of your income to investments. However, if you are looking to pay down debt, the 70/20/10 rule specifically makes you set aside 10% of your income for debts.
Adjust if necessary.
Budgets are made to be adjusted. So, if one percentage rule is not working for you, try another. You may have to try several different budget percentages to find the one that works best.
Ask the Experts
WalletHub asked a panel of experts to share some tips for strategically allocating your spending using percentage-based goals. You can click “Read More” under each expert’s name and title to see their answers to the following questions.
- Do you think using a percentage-based budget strategy, such as the 50/30/20 rule or the 70/20/10 rule, is the most effective approach?
- Who would benefit the most from using percentage-based budgeting strategies, such as the 50/30/20 rule or the 70/20/10 rule?
- What do you think is the best way to allocate money between necessities, luxuries and savings?
Ask the Experts
Ph.D., Associate Professor, Department of Economics – Florida International University
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Ph.D., E. Bronson Ingram Chair, Professor of Accounting – Vanderbilt University, Owen Graduate School of Management
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JD, LL.M., MBA, Associate Professor, Eastern Illinois University, Department of Accounting
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Ph.D., CPA, Clinical Assistant Professor - Adkerson School of Accountancy – Mississippi State University, College of Business
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Executive Director of Business Leadership & Professor of Practice-Purdue University-Mitch Daniels School of Business
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MBA, CFP®, Director of CFP® Board Registered Financial Planning Program - Financial Literacy Institute, Visiting Professor – Delaware State University, College of Business
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WalletHub experts are widely quoted. Contact our media team to schedule an interview.