The 70% Rule: How to Afford Spending, Saving, and Investing on ANY Income!

Today I'm sharing a secret that has changed my life and will definitely change yours as it helps you determine WHERE your money should go – it's called the 70% rule!

The 70% rule tells you how much to budget for spending, saving, and investing - get the details from Fun Cheap or Free

When I work with families or individuals, an overwhelming issue Freebs want help with is figuring out, based on their income, how much money to spend vs save, and how to be able to afford vacations and FUN while still paying bills and being financially responsible.

Well, the time has come to give you all my secret sauce.


I'm going to share one of my simplest (but most effective) secrets with you. I'm a bit nervous about it, for I feel once I do no one will need me any more (waah!). But I love you, so I'm going to share it anyway…

The 70% rule is a financial principle that not only works, but it will work FOREVER. With a little adjusting, this will help you throughout your life to know exactly how much to spend, save, and invest… no matter your income, debt, where you live, or stage of life. 

When Bubba and I finally saved up enough and had a stable enough income to move into our home, we were on cloud nine… until Bubba had to take a 40% pay cut a few months after closing. Wah waaaah. The good news is that this principle helped us stay on track. No derailing, no panicking, no living off of credit cards. We knew exactly what to do. Though we had to work hard, it didn't ruin us like our F.D (Financial Disaster) nearly did.


Doesn't that sound dreamy? Well, as dreamy as any kind of budgeting system can be, anyway… Let's get to it. I now introduce to you…


Duhn duhn duuuuuuhn! It's simple, really. Here's how the 70% rule works:

The 70% rule, how much to budget for spending, saving, and investing... SO DARN SIMPLE! From

You take your monthly take-home income and divide it by 70%, 20%, and 10%. You divvy up the percentages as so:

  • 70% is for monthly expenses (anything you spend money on)
  • 20% goes into savings, unless you have pressing debt (see below for definition) in which case it goes toward debt first.
  • 10% goes to donation/tithing, or investments, retirement, saving for college.

Piece of cake. Piece of crumb cake. (Name that movie!)


The beauty of percentages vs hard-nosed numbers is that percentages fluctuate easily; your budgets will always grow or decrease with you! You'll never be lost or confused. If you make $1000, $10,000, or $1,000,000…you can always easily find 70% (with help of a calculator, if you refuse to do mental math like I do).

Another beauty with this method is that everything is covered! You HAVE money set aside for savings/debt… for spending… for investing, retirement, or charity… you're covered! So you don't need to feel guilty when going on vacation, and no need to stress worrying about how you'll ever get your dang credit card paid off. Gotcha covered, chap.


With every tip I share, you MUST remember to make this work for you! I've had lots of comments and questions about wanting to give 10% tithe AND put money toward retirement. If you can afford it, YAY! GO FOR IT!

This is just a general guideline.

For us, until recently we wouldn't possibly have been able to live off of less than 70% because we made so little. I understand that so many of you are in that same situation and it's a huge trial. I've been there.

As we got out of debt and my husband got better paychecks, we were able to move into more of an abundance mode… so we take from the 70% and use some of that to go toward investing, retirement, and college for our kids, all while preserving the 20% savings and 10% tithing.

OK! Now on to…


We're finally getting to the meat and potatoes! Trust me! You want to read this part… checkout all the components of my financial principle:


When I say “income”, that doesn't mean the income listed on your tax statements. When I say “monthly take-home income” I mean literal IN-come… the amount of actual dollars that actually hit your bank account each month. 

Yes, that means after taxes, insurance, withholdings, etc. From here on out if its not deposited into your checking account, it's not considered “monthly take-home income” in Jordan-dom. Kapish? 


  • Find your monthly average. If you're paid monthly or bi-monthly, total how much hits your account (average at least 3 months) and put a solid monthly number to it – not weekly.
  • Random paychecks. If you have a tip-based, commissioned, or service-based income, you need to find an average so you aren't having to re-calulate budgets every month of your life. Read “How to budget on a tip-based or varying income” to see what to do about that.


Expenses include EVERYTHING you spend money on, including (but not limited to): bills, utilities, emergency or unexpected expenses, shopping, food, you name it. If you spend money on it, it's considered an expense.

Th 70% rule helps you know how much to spend - Tips from Fun Cheap or Free


  • Let's pretend your monthly take-home income is $3,000/month, for easy math's sake. Remember, this is the total amount that actually gets deposited into YOUR bank account each month!
  • Find 70% of that take-home income.
    • 70% of $3,000 is $2,100 (3,000 x .7 = $2,100).
  • So everything you spend money on in a month needs to total $2,100 or less (in this example, anyway). That includes mortgage + bills + fun spending + insurance + utilities + eating out + groceries…everything.

70% or less is the real key. If you don't NEED to live off of 70%, then by all means, don't! The less you spend, the more you can save and invest = the better life your family will have. 70% is the maximum.


Pull up every dime you've spent for the last 3 months (you read that right) and put it on a spreadsheet. EVERY DIME…even if it's $.50. Every dime or this won't work!


On a spreadsheet – so you know at a glance what you're spending money on (groceries, eating out, clothing, decor, bills, school fees, etc). It's best if you can see it!

Don't have a credit card or bank statements because you pay cash for everything? That means you don't have accurate record of all spending, so you'll need to start tracking EVERY DIME you spend for the next 3 months. You really should do it electronically. Don't like credit cards? Use a debit card, it's basically like cash.

You want to make sure you're tracking everything and know what categories your spending the most on! I really, really, really recommend using a debit card. Once you have a handle on it you can go back to cash.


Find the total of all spending (for all 3 months) and divide by 3, so you find a realistic average. 

Now that you have your average, you can make some real decisions about how to move forward. If you are under 70%, you are GOLD! But what if you're over?


Are you over your 70% guideline? It's okay. Take a deep breath. Now, make a duplicate copy of your spreadsheet – so you don't mess up the original!! Start deleting unnecessary, “want” (not “need”) expenses, that you could cut out monthly. This could include things like eating out, shopping, late fees, etc. Keep deleting until you're within 70%.

What if no matter what you do, you can't get it to fit within 70%? Get real with yourself and make it happen. Sell your car. Move to a cheaper house. Cut your cable. Get a better paying job.

Sorry to break it to you guys, if you're spending too much, you're spending too much! I'm tough love here because Bubba and I did sell our car. We did cut cable. We stopped eating out entirely. I stopped getting my hair cut professionally. We did it!

We first focused on cutting back to get our debt and spending in order, and build up savings. Over time our focus has shifted to making more money (thanks to Bubba working his tail off) so after paying off debt and working hard, we now have started sneaking those luxuries back in our life. It's like losing weight. You might need to live off of lettuce and water to drop 100lb, but eventually you can start eating cookies again… in moderation, of course.

See “The Simplest Budgeting Technique Ever” for easy ways to keep your budget in check each month! It's sooo simple! My “Why a Monthly Budget is So Yesterday (…and What to do Instead)” post is also very helpful.


Dave Ramsey won't like this, but I don't necessarily believe that everyone should make paying off their house an absolute priority. Why? Because for Bubba and I it wasn't even close to an option for the first 8 years of our marriage.

I think you can be very smart; pay extra toward principle, refinance to get a better interest rate, buy a home that allows you to keep all spending to 70% or less of your income. But do we need to sink every dime we have into paying off a house? Not in my book.

When I say “pressing debt” I mean the urgent, expensive debt that is hurting your credit and costing you LOADS of interest each month: namely credit cards and loans. You need to be your own judge if pressing debt is a car loan in your house. Cars are weird for us because they are a business expense, so I'm not going to answer that one for you. Just make sure that any car payments fit easily in your 70% range if you get or have a car loan.


Keeping with our $3,000 example, 20% would be $600/month. Yes, 20% might seem high…but yes, savings is that important! I suggest 20% (at least). If you can spare more, sure, do more! ESPECIALLY if you are paying off debt… put as much as you can spare toward it so you can be free and move on to bigger and better things.

Know how much to save with the 70% rule from Fun Cheap or Free

If your current financial situation can't support setting a solid 20% aside each month, that's ok! Do your best to get on your feet financially, put away as much as you can, then add more % as you can spare it as time goes on.


I recommend having 10% go into Family Savings and 10% going to Emergency Savings. I explain the difference between the two in my 7 Bank Accounts Your Family Should Have post.

Have it automatically draft into those bank accounts each month so you never have to think about it! Not sure how to do that? Call your bank, they can set it up in a snap.

If any fees are involved with auto drafting, get a better bank! We bank at Chase, but there are lots of great ones out there.

DON'T SKIMP ON THIS NO MATTER HOW TEMPTING IT IS! The beauty of having half go to Family Savings is that that is where the “fun” stuff you never seem to have money for (…Disneyland…a boat…new couches…a car…) comes from. The beauty of having half go to Emergency Savings is that it will protect your family when the inevitable hits!

We will all need our savings at one point or another. 10% is nothing to protect your precious family. Again, see my 7 Bank Accounts Your Family Should Have” for more details on these different savings accounts.


Since the day I turned 8 years old, 10% of anything I earned has gone to my church. Not because my church is destitute or money-hungry, but because I firmly believe (and have seen it again and again and again in my own life) that karma is REAL. God is GENEROUS, and 10% is little compared to what He gives. Not to mention you get back 10 times what you give in life, and I'm living proof of that. BUT… I understand not everyone feels the same way.

Here's what to do with that 10% (which, as per our example, would be $300/mo):


Find a cause you feel passionate about! If everyone gave a mere 10% of their bounty to others, our world would change forever. Find a way to give back, and commit to a solid 10%.

Alternatively, that 10% could be used for a number of things including:


If donating isn't your gig, here's the opportunity to invest! This would be in addition to a 401K or anything else that's taken from your paycheck.


Here's how to afford your kids' college and/or weddings! Chip away at it by putting money away each month.

Remember, as mentioned above, you don't have to limit yourself to 10%! Just be sure to set aside AT LEAST 10%, no matter your income. For us, we wouldn't have been able to afford more than 10% for years, but now we can. So we take money out of our 70% for retirement and investing, as we can afford it. Remember, this is of your TAKE HOME income. If you have money coming from your paycheck into a 401K or other retirement account straight from your paycheck, then keep that in mind as you decide how much more to pull from your 70%.


(does anyone else feel like they are in an 8th grade Social Studies class?)

This principle is SIMPLE and LIFE-CHANGING for 3 simple reasons:

  1. Percentages, rather than numbers, make budgeting easy as life naturally fluctuates.
  2. By following the 70% rule you have all your bases covered, and can magically afford everything you've been wanting/needing to afford.
  3. Um…I don't know. I just like things that come in 3's.
Want my secret on how to afford spending, saving and investing on any income? Check out the 70% rule from Fun Cheap or Free

I promise this works.

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If you’re new here, welcome! You can get all my budgeting and finance tips, and my secret sauce in my fun-to-watch video program Budget Boot Camp

You have nothing to lose because if you don't save or earn at LEAST what you paid for it, I'll give your money back. So use the code FCFBLOG at checkout to get an extra 10% off, and give it a try!

Make sure that you check out these other posts that will help you out!

Jordan Page Signature from Fun Cheap or Free


  1. AvatarMarissa says

    Great post! Question: would things like investing for retirement go in the 70%, or is retirement counted in the non-take-home pay (and thus separate from the numbers you talked about)?

    Also, you mentioned Dave Ramsey “won’t like” what you are saying because you don’t want to attack the house debt. I know you haven’t looked into him too much so that you keep your ideas separate, but he actually recommends keeping the house part of your debt separate and paying it off in baby step 6 (rather than baby step 2 where all other debts get paid off). Just thought I’d help ease your mind 😉

    • AvatarFunCheapOrFree says

      YAY! Thanks for letting me know about Dave R., glad to know we have many of the same ideals! As for investing and retirement, go read the “10%” section, it explains that. If you tithe or donate 10% then and you also want to set money aside for retirement and investing (which I recommend), then yes, it would come out of your 70%. If you have retirement money coming from your paycheck already, then be sure to consider that when reevaluating your percentages. Thanks for reading! XO

  2. AvatarKimberly says

    OK, so not to get into a doctrinal debate, but my tithing comes out to be more like 13% than 10% because we pay tithing on what we make before taxes, insurance, retirement, etc. Also would fast offering be part of this or the 70% expenses? Thanks.

    • AvatarBlythe says

      Lol, I thought the same thing about my tithe when I wrote out our percentages. I personally let it come out of the 70%. I think the general principal is the most important thing.

    • AvatarAmber Petersen says

      Mine is the same way, so it made my numbers all weird. I would just add percentages to the tithing part and take away from the expenses, but I guess that just defeats the whole thing.

    • AvatarFunCheapOrFree says

      To each his own! We were taught to pay 10% of all increase and otherwise it’s up to each individual family, so there’s no problem in doing it however you see fit! As for Fast Offering, yes, that comes out of our 70%. Thanks for reading! XO

  3. AvatarSara says

    I love this! After adding up all of our bills they equal less then 70% of our income, but I didn’t account for our weekly $20 allowance each or eating out/gas. OUCH! We will be sitting down and reevaluating these things for the month of August because I would love to build up more of a savings account rather then eating out twice per week.

    As always, thanks for your great tips and advice.
    Sara recently posted…Ronin HughesMy Profile

    • AvatarFunCheapOrFree says

      I’m so happy for you that you are less than 70%, I can’t tell you how FANTASTIC that is!! Most people don’t realize that they are in the upper 90%, so 70’s or less is killer! I’m proud of you, let me know how the re-evaluating goes! XO

  4. AvatarKristen S. says

    I really like this method! Quick question on pressing debt (with a lengthy scenario for you):

    I have student loan debt that I would consider a pressing debt because the interest rate is really high, and the total loan amount is bigger than my mortgage + car (we made some poor financial choices as 18 year olds!). In this case, how do you handle? Obviously it’s a monthly expense that I am required by the lender to pay every month, so does this come out of the 70%, or is it considered Pressing Debt and comes out of the 20%? The monthly payment is actually larger than what 20% of my monthly income would be… can something like this cross over into two categories so we know how to budget for it?

    • AvatarSarah says

      I was wondering about student loan debt too. My husband and I each have loans from grad school which are on income-based repayment. We’ve been paying it as a monthly bill…should it actually be considered pressing debt?

      • AvatarFunCheapOrFree says

        I would consider it pressing debt. However, my brother in law is a doctor. His schooling took over a decade and wracked up over $200K, so that’s not so easily paid off in just a few months. However my husband and I considered student loans pressing debt, so that’s my opinion. But just figure out what it means for you!

    • AvatarFunCheapOrFree says

      Hmm…that’s a tough one. And I’ll be the first to admit that I’m NO financial planner! Without knowing your financial situation (aside from what you told me) I would say YES it’s pressing debt. Do everything you can to attack it and get it GONE! Think of how much freed up money you will have once it’s paid off, not to mention how good it will feel to be free of it. We sold our car and refinanced our house in order to get out of our debt, so while it may sound drastic, it was only for 1 year then we got back on our feet! Put 20, 30, 40% toward it if you can! Just whatever you can spare. But make it a top priority. It’s costing you so much money and probably stress, do what you can to get rid of it. The harder you hit it, the faster its gone and the sooner you can go back to usual spending and saving! I’m not sure what your savings is like but if you have at least $1000 in savings, I would put all 20% from your “savings” category into the debt. That’s just me though, you need to decide what’s best for your family and don’t be afraid to talk to a professional about it for further advice! XO

  5. AvatarKathleen says

    Hi Jordan,
    I was so happy to read the post and it comes just in time! Thank you as it all makes total sense.
    What I was sad to read was why you tithe. Tithing shouldn’t be about Karma and “give, just so we can get more”; it’s a gift from God. I think it amazingly gracious of Him to say about HIS money “look, you keep 90% and just give me 10%”. That’s a GIFT!! Obviously He doesn’t need the money; it’s His anyway, but He’s testing our faith and seeing if we’re trusting Him fully, yes even in our finances. Many trust Him wholeheartedly, except not in their finances.
    I suspect you kept that part “generic” as to not cause a spiritual storm and I pray you tithe because you are SO STINKIN THANKFUL For how He’s blessed you and your family.
    I hope this doesn’t offend.
    Grace and peace.

    • AvatarFunCheapOrFree says

      Glad we’re on the same page! As you can imaging, having to summarize why I tithe in just 2 or 3 sentences is next to impossible. Plus I didn’t want to sound preachy. But just know that you and I are 100% on the same page, and WHY we really tithe goes much deeper than Karma. Thanks for reading!! XO

      • AvatarDan says

        its simply called paying it forward and it does come back to you, test me on this, or test him on this. I am someone that squeaks when it comes to money, but the chance came up to test the word and I found it to be true give, and you receive to give again and be more helpful.

  6. AvatarCammie says

    What do you do to tithe 10% AND invest and save for college? For example, do you invest with one of your 10% savings accounts? Is a portion of your family savings account dedicated to saving for college? Thx!

    • AvatarFunCheapOrFree says

      For us, this is new because finances have been so tight for so long, all we could really spare was the 70/20/10 formula. But now that we are in abundance mode, we take from the 70% and put it toward investing, retirement, and college. Just take the general percentage idea and make it work for you! Hope that helps!

  7. AvatarJen says

    I like the formula concept, but I am having a hard time with a few areas in it. Everyone should be saving 15% towards retirement (IRA’s, 401k’s, etc…) so you’re saying that you can only give towards retirement if you choose not to tithe your 10% b/c that is all that is allocated there…. I think it should be more like 60% expenses, 10% tithe/donating, 15% Retirement, 15% Savings (including college and future expenses). Debt should be paid first! Sorry, big dave ramsey follower here.

    • AvatarFunCheapOrFree says

      Perfect! No, I think that’s great! I was just showing the bare-bones formula system, I think it’s important for everyone to adapt to make it fit. When we were in our financial crisis, there was no way we could live off of just 60% because we made so little income. As we shift into Abundance Mode, we can spare more. So I think that formula of yours looks great! Thanks for sharing 🙂

  8. AvatarAmanda says

    I know my husband and I MUST start this plan because we desperately need to get control over our debt and spending. I just started reading this blog and I am IN LOVE. Cannot wait to start putting all these tips to use. So, with the 20% towards Savings – I know we will have to put at least half of that towards debts. Then do I further split the remaining 10% between Family Savings and Emergency savings?

    • AvatarFunCheapOrFree says

      I’m so glad you like it, thanks for the feedback! If you have “pressing” debt, I would put the whole 20% toward it (especially if it’s credit card debt!) until it’s gone. THEN focus on building up savings. Best of luck!!!

  9. AvatarWill says

    I’m a fan of simple budget principles. You are first that I’ve seen to include tithing as a priority. My one question though is have you considered, for those that do tithe, suggesting that tithe should be from gross income. For me, even though tithe is not a “tax” to God, but rather an expression of our trust and faith in Him, it just seems more appropriate to give Him the first fruit of our labor rather than after the government gets it’s share.

  10. AvatarLaura says

    Thanks so much for this post, so much helpful information in it! Our situation is tricky as we are self-employed…so our income varies month to month and year to year. It is also seasonal work so several months of the year there is very little coming in at all. While other months are easier on us. any thoughts/tips?

    • AvatarFunCheapOrFree says

      We’ve been self-employed 100% of the time! So I get it! This is exactly why we live by the 70% rule. Just find a 6 month income average and live off of that. Tuck surplus away in an account to tide you over on the “low” months.

  11. AvatarAmethyst says

    This 70/20/10 plan is also highlighted in the book “The Richest Man in Babylon” by George Clason written in 1926. However, it used 10% for savings (“a portion of all you earn is yours to keep”), 20% for paying off debt/investment (“make your money/gold work for you”), then live off the 70% as much as possible. It truly is a brillant starter plan for budgeting!

  12. AvatarJennifer Castleberry says

    I love this strategy and I totally want to try it!! Questions:
    1. How do i get to that 70% goal?
    right now we spend 86% of our total income….14% of that is what we have left over to go towards debt and other. The expenses we have for the most part are needed. I can see 4 monthly expenses that we have that we can do away with; and if we did that then we still wouldn’t be in the 70% goal range. Big part is child care. we only have 1 pressing debt and that is our credit card and the debt is small; and easy to pay off. The other 3 debts are Home and two vehicles. Ours goals are to save and save in multiple accounts such as you suggested: Family, Emergency, General, Kids etc accounts too.

  13. AvatarAdrienne says

    Wow, this is great advise. Just went through the last three month spending and WOW, #%&%%#!, this is a tough lesson. We have such a decent income and still never get along, well now I know why. Last years we cut through all the ‘big’ things and I thouht this might help. No, it’s the small daily clutter that accumulates to unbelievable sums. Thank you SO MUCH, for the eye opener!!!

  14. AvatarElaina middleton says

    Here is my question how do I apply to my paycheck so that I can set the money aside? Do I divide the percentages in half and go from there? So that for the month I still have that total?

  15. AvatarAlecia says

    My husband and I both just finished college and both have full time jobs. We were having a hard time setting a budget and this was PERFECT!!!! It helped so much to put everything in check. THANK YOU!!

  16. Avataremwheiler says

    Thank you for this!! My husband is about to complete his MBA program and I am a little stressed about organizing finances and paying off debt. This is SUPER helpful to get us started out on a good path with a real income.

  17. AvatarKatie says

    Wow! This is eye opening!! I’ve toyed with budgeting for years (not seriously until recently) but never felt like I truly understood how to budget effectively. You made this so simple to follow! I will sit down and plan out my budget with this info next week!

  18. AvatarCrissy says

    I have heard of the 70% rule many times before but I love how simple you make it and how you break it down. After I watched your video, I immediately implemented it into our budget along with simpler categories. Thank you!

  19. AvatarCourtney says

    I love this rule! It’s helped my family so much! It’s sooooooo much easier to set a budget this way! Before using this technique nothing was going into savings because of the way I was budgeting. THANK YOU!

  20. AvatarElizabeth says

    I love this idea! It has worked so well for me and I was able to save my first $1000 in just under two months!! I will be living by this from now on!

  21. AvatarJoni says

    A couple of years ago my husband had to go overseas for his job and began to make a lot more money during that time but I found we were still struggling. I wasn’t tracking our spending, I was paying bills simply by checking my account balance, and grocery shopping without a budget, and always feeling like we didn’t have money to do much else. That’s when I came across your 70 percent rule and we have never gone back. Turns out we had plenty of money, even some to save, but our irresponsible methods were doing nothing for us. Now we spend at or below our means, have money to save, and money to spend on fun family activites every now and then too.

  22. AvatarSara says

    This has changed how we budget dramatically. We always have had a pretty good budget but this just took it up another level and now I finally feel like we run our money and it doesn’t run us!

  23. AvatarKellie says

    I love how you add tithe into your budgeting advice! This is very unique and very helpful ? thank you also for explaining the whole 70% rule so clearly ?

  24. AvatarDiane says

    I love the idea of only living on 70%, and using percentages so you can (hopefully) always put money into savings. I’m trying to fully implement it next month.

  25. AvatarTori says

    I love this post! Such a helpful way to get on a budget! Thanks for taking the time to help all of us fulfill our dreams and get on top of our money!!

  26. AvatarDeenna says

    This principle has changed my life! My budget is so much simpler to figure out and it makes saving feel easy rather than struggling to find a balance between the two! Thank you!

  27. AvatarKarina says

    I’ve read and re read the post. I may have missed it. ? But does the 10% is to a certain extent part of your 70%? And going a little further (with the 7 bank accounts post) what account would your tithe/donation come out of? Your expense account? And is this set on auto pay? Thank you. Extremely late post but hope it is answered.

  28. AvatarDonna scoggins says

    Question..if I have $ automatically going to a credit union acct plus retirement money drafted from my check, and husband has 401k drafted from his check, do those count as part of the 20% savings? This has been a real point of confusion for me. Thanks so much..

    • AvatarFunCheapOrFree says

      Hey Donna, remember, the 70% rule only applies to your TAKE HOME income – AFTER taxes, withholdings, retirement, etc. So only do the 70/20/10 on the money you take home from your paycheck and physically deposit into your personal bank account.

  29. AvatarLouisha Blum says

    Hi my question is in regards to debt, i have a loan i got at a great interest rate, the cost of me to get out of the loan early will be more money than the interest i will pay over the life of the loan is this worth paying it off, it seems silly to pay 100+ extra dollars to get out early.

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