What is the 70/20/10 Budgeting Method?

How do you beat the financial blues? This is a concern for people of all income levels. According to a recent survey by the American Psychological Association, 64% of adults indicated money was a significant source of their stress. To ease your financial stresses, it’s key to have a monthly budget. One type of budgeting is the 70/20/10 method. The 70/20/10 split model can be helpful for a majority of households. 70% of your monthly budget should go to monthly expenses and 20% should go to savings. The last 10% should go to debt. If you’re in a position where you don’t have a debt to pay off, this 10% can also go to donations. 

So, how do you build this budget? Let’s break it down.

How to calculate your monthly income

Use your net monthly income as the baseline for how to budget each month. To calculate your monthly income you first have to figure out your yearly pay. Multiply your hourly wage by the number of hours you work each week. Then, multiply the total by 52. Now that you know your annual gross income, divide it by 12. You’ll be left with your monthly income.

What is the 70%?

Living Expenses. This includes your mortgage/rent, groceries, gas for the car, childcare, etc. Basically, all of your living expenses are necessities. Calculate 70% of your net monthly income and subtract your living expenses. If you have income left for this category, that’s money you can spend on other things. If you don’t, that is completely okay. We will cover expendable income later on in this article. 

What is the 20%?

Savings. This percentage breaks down into three subcategories. The first subcategory is 10% for retirement. If you’re younger, this might seem like a silly task. But, putting aside funds for retirement early on is extremely crucial. It’s estimated that a retiring couple could need up to $295,000 for health care alone, so it’s important to plan ahead and start saving as soon as possible.

Next, set aside 5% for emergencies. Emergencies can include anything from car trouble to periods of unemployment. It’s there for any large, unforeseen expenses that may come your way. As we’ve seen with the COVID-19 pandemic, we need to be prepared for anything. It’s tempting to dip into this fund, but leaving it alone for as long as possible is crucial.

The remaining 5% is for your specific goals. This is where you’ll put a little extra away for things like vacations, a new car, college tuition, etc. Similar to your emergency fund, this 5% is all about planning ahead. 

What is the 10%?

Debt. Part of the reason this model can be so helpful is this last category. Anyone can acquire debt. It can pile up from car loans, student loans, medical costs, credit cards, etc. The last 10% of your budget will go to paying down any long-term debt.

If your goal is to have more financial stability, it’s good to have a perspective on your debt. Hopefully, with some more discipline, you’ll slowly get out of debt. 

If you’re in a place where you don’t have any debt, consider donating to a cause that is important to you!


If you’re able to cover each category with funds left over, you’re on a great path. Keep saving and planning ahead!

If it doesn’t add up, do not fret! Now that you have your expenses organized, look at where you’ve gone over budget. For example, if your debt is at 15%, you may need to temporarily reduce one of the other categories. You may have to reduce your savings for specific goals. In the meantime, you can set a personal goal to get that number down to 10%. If it's difficult to adhere to the 70/20/10 ratio, then you can make adjustments if needed.

Saving for future expenses is just as important to pay off debt. If you’re over budget on your living expenses, consider adding another source of income or cutting back. You can pick up a side hustle, eat out less, or limit how many online streaming services you use.

[ays_quiz id="22"]

It’s important to remember that there is no one-size-fits-all for structuring a budget. The 70/20/10 method might not be for you. Your needs and goals will change as you get older. No matter which model you choose, the most important factors are having clear goals and discipline. If you’re able to stick to your budget, you’ll be able to lessen your financial stresses.

How to Save Money at Restaurants

I’m not going to deny it — preparing and eating food at home is almost always cheaper than eating out. You have control over how much you buy and what you buy and you aren’t restricted by a menu. It also saves time, especially if you meal prep or make something that produces a lot of leftovers. However, there still are occasions when eating out is more efficient or the only option. You could be traveling or something went awry in your plans. However, it can be costly, especially if you have children. Here are some ways to reduce the impact of eating out at restaurants on your wallet. 

1. Choose a place to eat with free appetizers and order a smaller entree

Many restaurants will offer free appetizers as a way to get people to get more traffic. For instance, some Mexican restaurants will give chips and salsa as a free appetizer prior to the main meal. People often do not take full advantage of this. If you eat these free appetizers and drink multiple cups of water, you can get pretty full by the time the entree comes. You need to realize, however, that you will feel more full than when you order. This is the exact reason why places wait to bring out the free appetizer until after everyone orders. You are more likely to order more when hungry. So don’t order a huge entree, no matter how hungry you are. Just keep in mind that after eating those free appetizers and drinking water, you will be nowhere as hungry as you are feeling when you first sit down.

2. Buy discounted gift cards

Many retailers will sell gift cards to restaurants at a discounted price. If you look, you can save 20%-50% on gift cards for a restaurant. Places such as restaurant.com and cardpool.com are great places to score gift cards at a discount. Just make sure to carry them around with you in case an opportunity to use them presents itself.  

3. Look for coupons

Many chain restaurants will put coupons and discounts in newspapers or magazines. Chains such as Olive Garden and Red Lobster will put coupons and discounts into magazines or utilize flyers offering a discount on entrees or another special deal. Just make sure to bring them to the restaurant and give them to the server along with the check as you are paying the bill.

4. Drink water

Beverages such as soda, beer, wine, or a mixed drink can cost a great deal of money at any restaurant you go to. Instead, just drink water (which is free) and wait to drink other beverages at home. Yes, it might stink to withgo wine with a particular meal, but water is free and also helps to keep your palate clean, unlike soda. Water is also the healthiest option you can get. 

5. Budget restaurants into your expenses

If you plan to go to restaurants and save for it, you can more easily eat out without the stress of overspending. You know how much you are willing to spend and you know that you can afford it. It makes sure you don’t overspend and also makes it possible to go to a mix of low-end and high-end places. 

6. If you have children, look for restaurants where “kids eat free” on certain nights

Some restaurants will have a certain night during the week where kids under a specific age can eat free. This usually also comes with the specification that the one free children’s meal has to be paired with an adult meal. This can save you a good deal of money for more nights where you eat out or more money for other things.

7. Eat an appetizer as an entree

Many places will serve appetizers that are like the size of an entire meal. Why not take advantage of this? This also helps you not to overeat as well as eat slower. If other people at your table also order appetizers as their main meal, you can share and sample more food. And who doesn’t want that?

8. Look for seasonal or time-sensitive deals

Many restaurants will do seasonal specials or discounts at certain times of the day such as lunchtime or happy hour. Other places will offer early bird specials for people who come before 5pm or a “final call” discount on buffet food during the last fifteen minutes. Before going to a restaurant, make sure to research if they have special discounts such as these and go during these times. Take screenshots or mark dates on your calendar so you don’t forget. 

9. Don’t go to a restaurant thinking that the “special” is discounted

Many restaurants will have daily, weekly, monthly, or seasonal specials that they advertise on the menu or a chalkboard. These are often meals that the chef is experimenting with or utilizes some type of in-season ingredients. People often believe that these meals will come at a discounted price, but this is not the case. These specials are often the same price as the other entrees or higher. Compare what you are ordering to other choices on the menu to see if it’s more reasonable to order something else. 

10. Split an entree with someone at your table

Restaurants often serve huge portions--enough for two people or more. If this is the case, a great strategy is to split an entree with someone at your table. Just order the entree, request an extra plate, and divide the meal when it arrives. This helps you not to overeat and cuts the cost of the meal in half. Another strategy is ordering one appetizer and one entree and then splitting both of them with someone else. 

11. Skip dessert

Desserts are often way overpriced at restaurants and can be very tempting for those of us that have major sweet tooths. However, you can satisfy your sweet tooth at home for a fraction of the price. One bowl of ice cream from somewhere can be a couple of dollars while a bowl of ice cream from a container you bought at the food store is often under one dollar. You will also most likely have a greater number of sweets to choose from at home. 

12. Follow restaurants on social media

If you follow your favorite restaurants on Instagram, Facebook, or Twitter, you can oftentimes get wind of special discounts before others. If you are thinking of going out to eat somewhere, check the restaurant’s pages before you go in case there is a deal you didn’t know about that is happening. Signing up for an email list can also help you more easily find discounts. 

13. Make eating out “special”

If you make eating out a treat, it is often more enjoyable and special than the everyday meals you eat at home. It becomes some sort of adventure or experience. If you order dishes you don’t make at home while eating out as well, it will seem more worth it. This helps to keep one’s budget low but also accounts for certain splurges which are a necessary part of living a balanced life. 

[ays_quiz id="11"]