The 75/15/10 budget: Pros, cons and who should use one

A budget can help you manage your money wisely and achieve your financial goals. It's important, though, to find the right approach to budgeting for your situation. Some involve detailed line items that label every dollar spent and saved while others divide financial responsibilities into broad categories with flexibility.

The 75/15/10 rule could be a good fit if you're looking for a simple budgeting strategy that helps you know how much to spend, invest and save—even if you have a lot of expenses. Here's what you need to know to decide if this budget is right for you.

The 75/15/10 budgeting method splits your after-tax income between needs, investments and savings. A few budgeting strategies suggest dividing your money into categories, such as the 50/30/20 budget, but this shifts a larger portion to needs:

• 75% for needs. This is for your everyday living expenses, including regular payments like rent or mortgage, car loans, student loans and utilities plus the variable amounts you spend on groceries, clothing and entertainment.
• 15% for investments. This is for your long-term goals, such as retirement, opening a business or putting yourself or your child through college. It could include investing in a 401(k), IRA, 529 plan, real estate, stocks, bonds, mutual funds, commodities, etc., and giving it a chance to grow over time.
• 10% for savings. This is for your short-term goals, such as building an emergency fund, saving for a vacation, or getting ready to buy a car. Money in this category goes into an interest-earning account that's easily accessible for planned larger purchases or unexpected emergencies.

"Categorized budgets simplify the process by organizing your money into broad, intuitive 'buckets'—such as Earn, Save, Pay and Spend," says Claire Hevel, design leader and co-founder of Thrivent's Money Canvas program. "This reduces decision fatigue and shifts your mindset from obsessing over every transaction to recognizing meaningful spending patterns."

Rather than micromanaging each dollar, with categorized budgets, you’re building a natural rhythm with your money, she says.

"For anyone who feels overwhelmed, this approach offers both clarity and control," Hevel adds. "It’s easier to do a quick gut-check like, 'Am I staying within my spend limit this month?' than to track and label every line item. Simpler categorization creates space for consistency, and consistency is what drives habit-building."

The 75/15/10 rule helps you allocate your money in line with your priorities. This particular split emphasizes putting the lion's share toward meeting your day-to-day needs while also making sure you're working toward long- and short-term goals. Without guardrails, it's easy to overspend on today's wants and wishes and not save enough for the future or build wealth.

Let's say your household earns $6,000 in take-home pay each month. With the 75/15/10 rule, that would mean $4,500 per month goes to your everyday needs, $900 goes to investments for long-term goals and $600 goes to liquid savings for short-term goals.

The 75/15/10 method can make sense if you have a lot of necessary expenses but still find it important to budget money for saving and investing. These are the main advantages:

• It's simple and doesn't require much tracking. Once you've sliced off 15% for investing and 10% for saving, the rest can be spent as flexibly as you need without documenting detailed subcategories, as long as you don't overspend.
• It's generous for spenders. Compared to other budgeting systems, the 75/15/10 budget allocates more income to your day-to-day expenses. This can be especially helpful if you have to spend most of your money on housing, food and necessities and can't lower those expenses significantly.
• It helps focus on saving for different goals. By putting some money toward long-term goals and some toward short-term, you're looking out for the multifaceted needs and wants of your future self. Like the 80/20 budget, this is a way of "paying yourself first."

All budgets have trade-offs, and the 75/15/10 rule may not be the perfect one for your financial situation as it changes throughout your life. Here are some of the drawbacks:

• Accumulates modest savings. With a total of 25% of your income going toward savings for short- and long-term goals, it's not the best choice if you want to save more aggressively.
• It can be limiting if you have a large amount of debt. Following this budget method doesn't give much wiggle room for paying down high-interest debt unless it comes out of your needs. One solution is to trim your spending on non-essentials if that's possible for you.
• The percentages may be unrealistic. Households that spend equal to or greater than their income may have a hard time diverting 15% to investments and 10% to savings. But, as with any budget, you can adjust the percentages to fit your situation.

With such a large portion of income devoted to everyday spending, the 75/15/10 can be a smart method for households with high or growing expenses, like families with young children. If you're dealing with rising child care costs or are putting aside money for a new or different car, you can be sure you're meeting your current needs while still building retirement and short-term savings with this budget method.

On the other hand, a stricter budget could help you reach your financial goals faster. Young professionals or those who could significantly reduce their spending on non-essentials may want to choose a budget that encourages them to live on less and invest more.

Consider these strategies to help make the 75/15/10 budget work for you:

1. Track your monthly income and expenses. Use a budget app or a spreadsheet to track your income and spending and see how the 75/15/10 ratio looks when applied to your financial situation.
2. Reduce your spending where you can. If your living expenses account for the full 75% of your income, it may be worth seeing if you can lower your spending by eliminating subscriptions or memberships you don't really use or eating out a little less. The more you can free up for your investing and savings goals, the better.
3. Adjust your budget as needed. At times, you may not be able to follow the 75/15/10 percentages exactly. As with any budgeting rule, adjust by allocating more to expenses or savings if necessary.
4. Get help when you need it. Expert help, like that of a financial advisor, can be critical, especially when choosing investments or developing a long-term financial strategy.

"A clear signal it’s time to reallocate your budget toward essentials is when core needs—like food, housing, transportation, or healthcare—are consistently underfunded or causing financial stress," Hevel says. "If you’re leaning on credit cards to buy groceries, falling behind on bills or feeling anxious about covering rent, those are warning signs that your financial foundation may need reinforcement. In these situations, it’s completely valid to temporarily scale back discretionary spending or put a pause on savings goals.

"Flexibility isn't a failure; it’s a smart response to changing circumstances. Budgets are meant to adapt. The key is to recognize when immediate stability takes precedence, make adjustments intentionally, and revisit your plan once you've regained some breathing room."

The 75/15/10 rule is a simple way to budget your money by diverting 75% to needs, 15% to long-term investments and 10% to short-term savings. It's best for those facing high or growing expenses, but there are several budgeting methods to choose from. A Thrivent financial advisor can offer expert advice on managing your money and balancing today's needs with tomorrow's goals.