30-30-40 Budget Revised

So for those that have played in the archives or been reading from the start, they may recall one of my first posts was on the 30-30-40 budget.  The basic idea was 30% of your take home pay towards housing, 30% to savings/debt repayment and the other 40% for everything else.

Since it’s been years since I looked at my spending/savings that way I thought it might be interesting to check if I’m even close to those numbers anymore.

The results were:

  • 28% housing (or 32% with extra)
  • 32% saving (or 28% without extra)
  • 40% spending

So I’m fairly close the the target amounts.  So what’s the extra?  Well I’m currently paying off my mortgage faster than I’m supposed to so I’m paying extra each month. Therefore if you put that as housing I jump up to 32%, but it could also be savings, so if that is the case the savings number becomes 32%.  It’s more of I’m not sure the best place to put it so I put up both, but either way I’m doing fine. (Note: the savings amount does not include my pension as that is taken directly off my cheque and I didn’t remember to include it when I first did the math for this post.  Also investment income was ignored due to the fact it is a bitch to figure out the after tax basis for that money.)

What I find interesting about this exercise is that we are doing fine regardless of my wife’s income is zero during her maternity leave (she’s self employed so she gets no EI money).  Actually once she goes back to work according the ratios we should start spending more, but I’m not sure if that is really going to happen.  Most of the money beyond the usual stuff is just going to savings and I don’t see that changing much as we already just expanded our spending amount earlier this year with a house improvement fund.

Another interesting question is the 30-30-40 really a budget if I don’t check it for years?  Not really, the 30-30-40 is more of a general guideline.  Despite all the talk about budgets and spending plans being a pain the reality is you just need information to give you feedback on where your money is going.  That’s the whole purpose of a budget in my mind.  I like the 30-30-40 as it is a quick rule of thumb check on my overall habits, but it lacks detail to do any really good planning with it.

So how do you stack up with the quick test of the 30-30-40?  Or do you have another method to check?  If so, please share.

7 thoughts on “30-30-40 Budget Revised”

  1. I’m not sure if I split this up right but i’m at:

    37% – housing (I’m fast-tracking this one, the mortgage is down to roughly a 12 year term)

    33% – debt and savings (about half to savings, half to debt)

    30% – misc spending, gas, groceries, spending, heat, hydro, water

  2. So essentially because this is Canada if you use gross income it’s a 50-15-15-20 budget to include the taxes 🙂

  3. We’re about there but for different reasons. We don’t have a mortgage but we did buy an old house that needs a lot of work so we are still paying 20% for the house (taxes and 1 major repair/reno per year…flat roof and and windows in year one, bathroom and furnace in year 2, now I’m in year 3 and we’re doing basement and skylights on the sloped roof, plus carpeting upstairs – we’re loading it up this year to take advantage of the tax credit) but once this year is done the MAJOR renos will be done so housing will really go down to about 5% (including utilities). We also have no debt other than investment loans which are interest only and a tax deduction (except for a car payment which will be finished in 2010). Then again, in 2010, the plan is for me to have a baby and my income will plummet to about 35% of what it is now, so the numbers will move again. Right now we have about a 50% savings rate (again, prepping for baby).

  4. Trac,

    HA! Now that is a good one, but so true!

    David V,

    Yes, mortgage and taxes. I don’t include anything else in that 30%.

    The saving fund depends. It’s technically savings right up until you spend it when it becomes spending. I would just tend to roll it into your spending total.


    Oh yes being mortgage free completely changes these numbers. At that point you want to keep spending the same and beef up savings. I agree the numbers will shift around depending on your situation and needs and wants. Like I said, it’s just a guideline.


  5. Hi! I am mortgage and debt free. My numbers are more like 10-50-40. However, as a low wage earner 40% “everything else,” is really only $500.0/mo. I am using my savings for an extensive backpacking trip! You have to LIVE sometimes!

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