5 Budget Rules to Follow for Spending Less

5 Budget Rules to Follow for Spending Less

5 Budget Rules to Follow for Spending Less

It’s tempting to get your paycheck and start making a mental list of all the things you want to purchase. But it is important that you use your money smartly by creating a budget and following through with it. It may sound daunting and like you will have to sacrifice your wants but sticking to a reasonable budget and putting money aside can be easier than you think.

Begin by creating a budget, which may assist you in reorganizing your money, prioritizing spending, and managing debt, allowing you to progress toward your long-term financial objectives.

How To Spend Less, Save More

1.      The 50/30/20 Rule

The 50/30/20 rule is a simple strategy for anyone who wants to spend and save properly. According to this approach, you should spend 50% of your post-tax income on essentials and necessities such as rent, utilities, food, etc., and 30% on desires and wants such as clothes, travel, hobbies, etc.

The remaining 20% is set aside for savings, including debt repayment, retirement contributions, and establishing an emergency fund. Following this basic guideline ensures that the critical things are taken care of while still leaving room for the activities you like the most.

2.      The 70/20/10 Rule

The 70/20/10 budgeting theory is a basic guideline that may help you determine how much of your income you can utilize during the month and how much you should set aside. This is how it works:

Begin by dividing your take-home salary by 70%, 20%, and 10%:

  1. 70% is for all your monthly costs, including bills, meals, and travel.
  2. Unless you have urgent bills to settle, you should set aside 20% of your salary for savings. These should be prioritized if the lower 10% does not cover your repayments.
  3. 10% goes to debt repayments, beginning with the greatest priority.

Of course, as with all budgeting rules, this rule is also subject to change, so if you want to pay off more debts or save more for financial well-being, you’ll need to update the categories appropriately so it rounds up to 100%.

3.      The 40/30/20/10 Rule

The 40/30/20/10 rule is a common and straightforward budgeting guideline. This is how it works:

  1. Rent/mortgage, electricity, and groceries should account for 40% of your income.
  2. 30% of your budget should be allocated to discretionary expenditures (such as dining out, entertainment, and shopping).
  3. 20% should be set aside for savings or debt repayment.
  4. 10% should be set aside for charitable contributions or other financial goals.

It is important to keep in mind that this rule is not set in stone. Your financial position may be unique, necessitating adaptations and reallocations, but the goal is to learn how to live below your means and not beyond them.

4.      The 80/20 Rule

Consider the 80/20 rule another alternative if you would perform better following an even simpler approach. This budget, a simplified variation of the 50/30/20 guideline, recommends putting away 20% of your salary for savings and utilizing the remaining 80% for essentials and indulgences.

Some individuals like this breakdown because it eliminates the need to distinguish between wants and necessities. After all, the line between the two might be blurred like a new coat, which could be regarded as a necessary or a fun indulgence.

As a result of the 80/20 rule, you don’t have to watch spending categories as closely. First, try automating payments so that 20% of your salary goes directly into your savings accounts.

5.      The 50/15/5 Rule

If you’re at a point in your life where you’re juggling numerous financial goals—perhaps you’re saving for retirement and your children’s education, as well as considering a new car—you might prefer the 50/15/5 guideline.

You should set aside 50% of your paycheck for necessities, 15% for retirement savings, and 5% for an emergency reserve. This approach enables you to cover your present requirements while planning for the future before spending money on anything else.

Of course, you don’t have to be a math genius to notice that those numbers don’t add up to 100%. That’s because the 50/15/5 guideline assumes you should pick how to spend the balance of your money each month.

You may put the extra money into your retirement accounts, save for a new automobile, or put it into a vacation fund. The remaining 30% is all about financial independence.


When your bank account looks strong after payday, it’s easier to splurge and be less cautious. The problem with spending more than you make is the negative consequences. This is why budgeting and conserving money are so important. A budget does not have to seem to limit. Focus on the benefits of budgeting, such as accomplishing your objectives faster and having peace of mind knowing you’re making wise financial decisions. Creating opportunities to reward yourself along the road can also help you remain on track.

Click to rate this post!
[Total: 3 Average: 5]