70‑20‑10 Budgeting Made Simple

Ever feel like your money disappears the moment it hits the bank? The 70‑20‑10 rule gives you a clear, no‑nonsense way to see exactly where every pound goes. It’s not a fancy system – just three percentages that cover the basics, help you save, and knock down debt faster.

How the 70‑20‑10 Rule Works

Break your after‑tax income into three buckets:

• 70% for essentials – rent or mortgage, utilities, groceries, transport and any regular bills. This should cover everything you need to live day‑to‑day.
• 20% for savings or investments – emergency fund, retirement accounts, ISA contributions or even a rainy‑day stash for a big purchase.
• 10% for debt repayment – credit‑card balances, student loans or any high‑interest debt you want to erase.

Put the numbers into a spreadsheet or budgeting app, and you’ll instantly see if you’re overspending on housing or under‑saving for the future.

Getting Started with Your Own 70‑20‑10 Plan

First, calculate your net monthly income. If you earn £3,000 after tax, the split looks like this: £2,100 for essentials, £600 for savings, £300 for debt. If any bucket feels tight, adjust the percentages – the rule is flexible as long as you keep the three goals in balance.

Next, track every expense for a month. You’ll be surprised how many small purchases eat up the "essential" portion. Cut back on subscription services you rarely use, or switch to a cheaper phone plan, and you’ll free up room for savings.

Set up automatic transfers. Move the 20% and 10% portions into separate accounts the day your salary lands. Automation removes the temptation to spend what you meant to save, and you’ll watch your debt shrink without thinking about it.

If you have multiple debts, focus the 10% on the highest‑interest one first – the "avalanche" method. Once that loan is gone, roll its payment into the next debt and the speed at which you become debt‑free will accelerate.

Don’t forget the emergency fund. Aim for at least three months of essential costs in a high‑interest savings account. It’s the safety net that keeps you from falling back into debt when life throws a curveball.

Review your numbers every three months. Life changes – a raise, a new lease, a kid in the house – and the percentages may need tweaking. The goal is to keep the three pillars working together, not to lock yourself into a rigid plan.

Many readers on Saxon Financial Insights have found this rule useful. Our article “Top Rule of Budgeting: The Key to Financial Freedom” dives deeper into why the 70‑20‑10 split beats complex budgeting methods. If you need a quick start, check out the step‑by‑step guide in that post.

Finally, stay realistic. If 70% for essentials feels impossible because of high rent, try a 60‑30‑10 split temporarily, then increase the essentials share as your income grows. The rule is a guide, not a punishment.

Give the 70‑20‑10 method a try for a month and watch how quickly you gain clarity on where your money is going. It’s a straightforward habit that can turn chaotic spending into a disciplined plan, helping you build savings and crush debt at the same time.