What Is The 75 15 10 Rule?

The 75 15 10 rule (or 75/15/10 rule) is a simple way to manage your money using percentages. It tells you how to divide your take-home income into three parts:

75% for expenses (your daily and monthly spending)
15% for investing (long-term future goals)
10% for savings (short-term and emergency money)

Because it uses percentages, this rule works whether you earn $1,500 a month or $6,000 a month. You just change the dollar amounts, but keep the percentages the same.

Think of it like this:

Every month, your money has three jobs:
live today (75%), build tomorrow (15%), and stay safe (10%).

Let’s learn what is the 75 15 10 rule?

Why Do People Use The 75 15 10 Rule?

Many people ask:

How much should I spend every month?
How much should I invest?
How much should I keep in cash savings?

The 75 15 10 rule gives a clear starting point. It is similar to other budgeting rules like 50/30/20, but it focuses more on flexible spending plus dedicated saving and investing.

Financial writers and planners describe this rule as:

A simple budget framework
A way to avoid overspending
A system that forces you to save and invest at least 25% of your income

You can always adjust it later, but it’s a great place to start.

What Is The 75 15 10 Rule?

1. 75% – Expenses (Your Everyday Life)

According to this rule, up to 75% of your take-home income can go to expenses. This includes all the things you pay for regularly, such as:

Rent or mortgage
Groceries and household items
Gas, public transport, car payments, car insurance
Utilities: electricity, water, internet, phone
Health insurance and basic healthcare
School or childcare costs
Subscriptions and entertainment (Netflix, dining out, etc.)

The key message is:

Try to keep all your monthly spending at or below 75% of your take-home pay.

If you manage to live on 60–70%, that’s even better because it allows you to save and invest more.

2. 15% – Investing (Grow Your Money)

The next 15% of your income is for investing, not just saving. This is money you put into tools that can grow over the long term, such as:

Employer retirement plans (401(k), 403(b))
IRAs (Traditional or Roth)
Brokerage accounts with diversified mutual funds or ETFs
Robo-advisors that invest in a mix of stocks and bonds

You usually invest this money for long-term goals like:

Retirement
Kids’ college
Buying a home in future
Long-term wealth building

This 15% is where compound growth happens. The longer you invest, the more your money can grow.

3. 10% – Savings (Short-Term & Emergency)

The final 10% of your income goes into savings that should be:

Safe
Liquid (easy to withdraw when needed)

Good places to keep this money:

High-yield savings accounts
Money market accounts
Short-term CDs (certificates of deposit)

This 10% is mainly for:

Emergency fund (job loss, medical bill, urgent car repair)
Short-term goals (small vacation, new laptop, moving costs)

Many advisors suggest building an emergency fund of 3–6 months of expenses using this savings portion.

Dollar Examples: How The 75 15 10 Rule Works

Let’s see some simple examples in dollars.

Example 1 – Take-Home Income: $3,000 Per Month

Suppose your net (take-home) income is $3,000 per month.

75% for expenses
- 75% of $3,000
- = 0.75 × 3,000
- = $2,250 for monthly expenses
15% for investing
- 15% of $3,000
- = 0.15 × 3,000
- = $450 for investments
10% for savings
- 10% of $3,000
- = 0.10 × 3,000
- = $300 for savings

So your monthly money plan looks like:

$2,250 → all spending (rent, food, transport, bills, fun)
$450 → long-term investing
$300 → savings / emergency fund

Example 2 – Take-Home Income: $5,000 Per Month

Now imagine your household take-home pay is $5,000.

Expenses (75%)
- 0.75 × 5,000 = $3,750
Investing (15%)
- 0.15 × 5,000 = $750
Savings (10%)
- 0.10 × 5,000 = $500

Your 75 15 10 breakdown:

$3,750 → living expenses
$750 → long-term investments
$500 → savings & emergency fund

A real-life style breakdown for $5,000/month could look like this:

Rent: $1,500
Groceries: $400
Gas & transport: $300
Utilities & phone: $250
Insurance & minimum debt payments: $500
Eating out & fun: $800
Other bills: $0–$300 (approx)

Total expenses ≈ $3,750, which fits the 75% limit.

Example 3 – Lower Income: $2,000 Per Month

If you earn $2,000 per month after tax:

Expenses (75%)
- 0.75 × 2,000 = $1,500
Investing (15%)
- 0.15 × 2,000 = $300
Savings (10%)
- 0.10 × 2,000 = $200

Even with a smaller income, you are still:

Spending $1,500
Investing $300
Saving $200

It might feel tough at first, but even small investments and savings add up over time.

Example 4 – Variable Income (Freelancer)

Suppose you are a freelancer and your income changes each month:

Month 1: $4,000
Month 2: $3,000
Month 3: $5,000

Using the 75 15 10 rule as percentages:

Month 1 – Income $4,000

75% expenses = 0.75 × 4,000 = $3,000
15% investing = 0.15 × 4,000 = $600
10% savings = 0.10 × 4,000 = $400

Month 2 – Income $3,000

75% expenses = $2,250
15% investing = $450
10% savings = $300

Month 3 – Income $5,000

75% expenses = $3,750
15% investing = $750
10% savings = $500

Because the plan is percentage-based, it automatically adjusts with your income, which is very useful if you don’t earn the same amount every month.

How The 75 15 10 Rule Helps You Build Wealth

Let’s see what happens if you follow the 15% investing part for a long time.

Long-Term Example – Investing 15% Every Month

Assume:

Monthly income: $4,000
15% invested: 0.15 × 4,000 = $600 per month
Average annual return: 7% (a common estimate for long-term stock market returns, not guaranteed)

We’ll see what happens over different time periods:

After 10 years (120 months)

If you invest $600 every month for 10 years at 7% per year:

Your total contributions = 600 × 120 = $72,000
Approx future value ≈ $103,000–$105,000 (rough estimate)

You gained around $30,000+ in growth beyond what you put in.

After 20 years (240 months)

Now keep going for 20 years:

Total contributions = 600 × 240 = $144,000
Approx future value ≈ $270,000–$280,000 (rough estimate)

That is the power of compound interest: you keep investing a fixed amount, and your money grows faster in later years.

Note: These numbers are just estimates, not promises. Real returns can be higher or lower. Always check risks and talk to a qualified financial advisor if needed.

75 15 10 Rule vs 50 30 20 Rule

The 50/30/20 rule is another popular budgeting method. Let’s compare.

50/30/20 rule:

50% → needs
30% → wants
20% → savings and investments

75/15/10 rule:

75% → all expenses (needs + wants together)
15% → long-term investing
10% → short-term savings

Quick Comparison Table

Rule	Spending Split	Future Focus	Complexity
50/30/20	Needs 50%, Wants 30%	20% save/invest	More detail
75/15/10	All spending combined in 75%	25% save + invest (15 + 10)	Simpler

So, the 75 15 10 rule:

Gives more flexibility inside the 75% spending
Makes sure a clear 25% of income goes to your future
Is easier if you don’t want to divide spending into “needs” and “wants”

When The 75 15 10 Rule Works Best

This budget style is great if:

You have high living expenses, but still want to save and invest
You prefer simple rules instead of tracking every category
You are new to budgeting and want an easy place to start
You want to “pay yourself first” and then freely spend the rest

It can be especially helpful for:

Young professionals
Families with growing expenses
Freelancers or gig workers
Anyone who struggles to save regularly

When You May Need To Adjust The 75 15 10 Rule

Remember, this is a guideline, not a strict law. You can modify it.

1. If You Have High-Interest Debt

If you have credit card debt at 20–25% interest:

You might use part of the 15% investing bucket to pay off high-interest debt first
Any extra beyond minimum payments reduces your future interest and is almost like a “guaranteed return” equal to that interest rate

Once you clear the high-interest debt, you can shift that money back into investments.

2. If Your Expenses Exceed 75%

Maybe your rent is very high or your city is expensive. If your expenses are 90–100% of your income, you might not hit the 75 15 10 numbers immediately.

In that case:

Start tracking your spending
Cut non-essential costs slowly (subscriptions, impulse shopping, frequent take-out)
Aim first for 80/10/10 (for example) and move closer to 75/15/10 over time

Even starting with 5% savings and 5% investing is better than zero.

3. If You Have A Big Short-Term Goal

If you are saving for a down payment in 3–5 years, you might temporarily:

Increase savings to, say, 15%
Reduce investing to 10%

After you reach that goal, you can go back to 75 15 10 or even 70 20 10 if you want to save more.

How To Start Using The 75 15 10 Rule (Step-By-Step)

Here’s a simple process you can follow.

Step 1 – Find Your Monthly Take-Home Income

Add up:

Salary after tax
Side hustle income
Any other regular net income

Example: Your total take-home income is $3,800 per month.

Step 2 – Calculate 75%, 15%, 10%

For $3,800:

75% for expenses = 0.75 × 3,800 = $2,850
15% for investing = 0.15 × 3,800 = $570
10% for savings = 0.10 × 3,800 = $380

Write these target numbers in a notebook or budgeting app.

Step 3 – Use Separate Accounts

To make it easier:

Keep one main checking account for expenses (75%)
Set up an investment account (brokerage or retirement account) for 15%
Keep a high-yield savings account for your 10% emergency savings

Step 4 – Automate Transfers

On the day you get paid:

Automatically send 15% to your investment account (SIPs/automatic investments)
Automatically send 10% to savings

This follows the “pay yourself first” method. Whatever remains in your checking account is your 75% for spending.

Step 5 – Review Every 6–12 Months

Life changes. So should your budget.

Check your numbers twice a year
Increase your investing percentage if your income grows
Adjust for new goals (house, kids, business, etc.)

Is The 75 15 10 Rule Right For You?

The 75 15 10 rule is:

Simple – only three numbers to remember
Flexible – can be adjusted when needed
Future-focused – 25% of your income is always for savings + investing

It may not fit every situation, but it’s a very strong starting point if you:

Don’t know how much to save or invest
Want a clear plan but hate complex budgets
Want to slowly build financial security

You can even use it like this:

“From my next paycheck, I will try to live on 75% or less of my income and put at least 25% towards savings and investments.”

Even if you don’t hit the numbers perfectly each month, aiming for them will already improve your money habits.

Also Read: Why Finance Matters: A Complete Guide for Everyone

Final Thoughts

Money management doesn’t have to be confusing. The 75 15 10 rule gives you a clean, easy structure:

75% – for your present life (bills, food, fun)
15% – for your long-term future (investing)
10% – for safety and short-term needs (savings)

With consistent action, simple rules like this can help you break the paycheck-to-paycheck cycle, build an emergency fund, and grow real wealth over time—one month, and one paycheck, at a time.