Easy Guide to the 70-20-10 Budget

If you have never heard of this budgeting method, I welcome you to Budgeting 101! We all start somewhere and we all need to figure out what works for us!

For this method you take your net income and divide it based on these percentages.

• 70% goes to your living expenses

• 20% goes to savings (Emergency funds, sinking funds, vacation fund) unless you have debt to eliminate.

• 10% goes to tithing or donations. I know others who use this 10% to eliminate debt or begin investing in retirement or college.

And that is it! This method works for ALL income levels because its percentages. The amounts change based on your income. It increases or decreases as things change in your life.

By following these guidelines, you are making sure everything is covered. You are building a savings in case something pops up, you are tithing (or investing), and you are making sure your living expenses are all paid for.

You can change the percentages based on what does or doesn’t work for your finances. If you don’t make enough to save 20% then change it to 80-10-10. The important part is that you cover all three. You need savings because if you do’t have them you are allowing yourself to rely on credit to save you when, and something will, unexpectedly comes along. Trust me, I can relate to not being able to afford to put ANYTHING into savings accounts. You will make it. Do what works for you. Just do not add to your debt.

Determining your Net Income and Expenses

Lets say you bring home $2000 a month. Remember, your net income if AFTER all taxes and deductions. This is the amount you actually take home.

Whats 70% of $2000? $2000 x 0.7= $1400

All of your expenses should be $1400 or less. You don’t HAVE to spend the $1400. If you can live off of less then you should apply the rest into the other categories. If you are spending more than that then you need to cut expenses. Can’t sugar coat it. You are spending too much.

Determining and Cutting Down Expenses

Take the last few months and add up every single expense you have. ALL OF THEM no matter how small. This can be tedious so if you are up for it, you can use Mint 

Mint is abudget tracker and planner made by Intuit. I have been using it for years and love that it tracks my expenses for me.

Guidelines if you have Pressing Debt

When you have pressing debt (See definition below) you should adjust the percentages so that you are working on eliminating what you owe. Pressing debt is different for everyone. Some consider car loans to be pressing or mortgages to be pressing while others simply include it in their 70% and they work on credit cards.

In my opinion, all debt is pressing. I do not like owing money anywhere. This is why my husband and I have been snowballing debt for over a year and have eliminated almost 50% of what we owed.

Goal: eliminate your pressing debt and begin to cash flow expenses that you would have previously used a credit card for.


Net Income:  Your take home pay. This is the amount you take home after all deductions. If your income varies, find the average. I was a waitress for a while so I understand varying incomes. Just try to figure out about how much you take home monthly.

Expenses: Anything that your money goes to. Bills, car payment, insurance, utilities, groceries, day care, etc…

Tithing: 10% of income as an offering (Lev. 27:30-34, Proverbs 3:9-10, Mark 12:41-44)

Sinking Funds: setting money aside for expenses that are regularly occurring (Insurance renewals, haircuts, car maintenance, etc… You set a little bit aside each month for that expense that you know is coming. Dave Ramsey explains it here.

Pressing Debt: pressing debt is debt that is causing hardship. Pressing debt is hurting your credit or has tons of interest accruing. Examples: Credit Cards or Loans. This debt should be handled URGENTLY.

It’s Budget Time!

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