The following clip was originally published in WalletHub’s Sept. 2, 2026 article “Budget Percentages” and features the following Q&A session with Axel Stock. For the full article, please visit: https://wallethub.com/edu/b/budget-percentages/145359#expert=Axel_Stock
Do you think using a percentage-based budget strategy, such as the 50/30/20 rule or the 70/20/10 rule, is the most effective approach?
In both approaches, an available budget is split among different spending categories. In the 70/20/10 rule spending is allocated between living expenses, savings and investments, and debt and donations. On the other hand, in the 50/30/20 rule money is split between needs, wants and savings.
It is hard to generally call one or the other rule “the best”. This may depend on the individual’s circumstances. An alternative rule to consider for budgeting is the objective-and-task method. In this method money is allocated not by fixed percentages, but based on what is needed to reach a certain objective within each category of spending. This provides flexibility that the other two methods do not have. For example, if an individual’s home needs a new roof in a given month it may not be enough to spend 50% of the budget although it is a need. That is why the objective-and-task method may be better, in general.
Who would benefit the most from using percentage-based budgeting strategies, such as the 50/30/20 rule or the 70/20/10 rule?
Individuals who typically reach or exceed their budget in spending in a month benefit from carefully planning their budget and to follow a specific rule.
What do you think is the best way to allocate money between necessities, luxuries, and savings?
As I mentioned above, the objective-and-task method is in my mind the better approach. For example, if the individual plans to purchase a car next year, more money can be allocated towards savings to accumulate enough for the necessary downpayment. Similarly, if the individual is in transition between jobs and working part time, then most of his budget needs to go towards spending.