The 70:20:10 Rule: A Simpler Way to Budget Without Feeling Deprived

Having to dabble with numbers and deal with finance, budgeting /forecasting, for my living, when it comes to personal finances, lazy me, would like to keep it simple and tension free and here is a no fuss, no excel approach that I follow. Some of you might know it. A simple tip to Make, Maintain and Manifest Money.

There are three bank accounts. All income come into my HDFC Bank. 28th of every month, I transfer 70% of my income to Union Bank of India from where all my expenses are taken care of and 20% of my income is transferred to Bank of Baroda from where I make all my investments. 10% I keep aside for debts, donations and emergencies.

Wondering how to do it or what does it mean? Let’s say your take-home salary is ₹50,000/month, it is the amount that gets credited into your bank, don’t keep the ATM card of that account, give an auto transfer instruction around the day of your salary credit:

• i. ₹35,000 → Spending. 70% to your spending Bank account.
• ii. ₹10,000 → Saving & Investing (SIPs, emergency fund). 20% to your investing Bank account and
• iii. ₹5,000 → Loan EMI or donations. 10% to your Charity/Donation account.

Using this method is easy to remember and apply.

• You still enjoy your money (70% is a big slice!).
• You build wealth consistently through the 20%.
• You become more intentional with debt or generosity.
• Automate your SIP/investments right after salary hits.
• If you get bonuses, use a 50:30:20 split for those.

This rule gives you structure without sacrifice. It’s financial discipline with freedom—and that’s the sweet spot. Here’s how you can practically apply the 70:20:10 rule in an Indian household, whether you’re a young professional, a student staying at home, or running a family.

70% – Needs & Lifestyle Expenses

This includes all your monthly spending, from the essentials to lifestyle choices. Typical Indian examples:

• House rent or EMI
• Groceries & daily household expenses
• Utility bills (electricity, LPG, internet, etc.)
• School/college fees
• Medical bills
• Domestic help (maid, cook)
• Petrol, Uber, Metro
• DTH/Netflix/Phone recharge
• Dining out, weddings, gifts, and family functions

In joint families, this part is usually pooled together.

20% – Savings & Investments

This is where the real magic happens. This portion helps you build wealth, achieve goals, and protect your future.

• SIPs in Mutual Funds
• Public Provident Fund (PPF)
• Fixed Deposits (FDs)
• Sukanya Samriddhi Yojana (for daughters)
• Gold Bonds or Gold Savings
• Emergency Fund in Liquid Funds
• Life Insurance (only Term Plans!)
• Retirement planning (EPF, NPS)

10% – Debt or Giving

Use this chunk to handle existing obligations or contribute to family/community.

• Credit card bills or EMI on personal/education loan
• Supporting parents or extended family
• Charity, temple donations, Zakat, tithe, or community service
• Monthly contribution to a family kitty or cooperative

Note: If you’re debt-free and not doing donations now, you can roll this into savings.

Example 1: Salaried Employee - Rashmi (Urban, Mid-Level Job)

• Age: 27
• Job: IT professional in Bangalore
• Take-home salary: ₹60,000/month
• Lives in a rented 1BHK, no dependents
• Has some education loan EMIs

Monthly Breakdown:

Automates SIPs on the 2nd of every month. Doesn’t pause during market dips. Uses expense tracker app like Walnut.

Example 2: Freelancer/Creative Professional – Rakesh (Variable Income)

• Age: 30
• Job: Freelance graphic designer in Mumbai
• Income: Averages ₹80,000/month (₹40k–₹1.2L range)
• Lives with family, supports household

Monthly Breakdown:

• Keeps 2-month buffer in account for low-income months. Adjusts investment % based on income fluctuations.
• SIPs are flexible (uses step-up or lump-sum when income is high)
• Always separates business vs. personal expenses

Automating the 70:20:10 rule in your life makes it effortless to save, spend wisely, and invest regularly—without thinking about it every month. Here are the best tools to help you automate this budgeting style: Pro Automation Combo (Sample Flow):

1st of Month – Salary Credited
↓
Standing Instruction to move 70% and 20% to different bank accounts
↓
1st or 2nd – Auto-SIPs kick in (20%)
↓
3rd – Auto-EMIs or donations (10%)
↓
Rest of the month – Spend freely (within 70%), tracked by app

You may ask, why different bank accounts? In India, your bank deposits are insured by DICGC — Deposit Insurance and Credit Guarantee Corporation. You are insured up to ₹5 lakhs per depositor per bank.

This includes:

• Principal + Interest
• Across all accounts combined in the same bank (Savings, FD, RD, etc.)

If You Have Accounts in Multiple Banks?

• The ₹5 lakh limit applies separately to each bank.
• If you have ₹4 lakhs in SBI and ₹4 lakhs in HDFC, you’re fully covered in both.

Tools to Pair with This Flow:

Common Pitfalls in 70:20:10 Budgeting & How to Fix Them

Are you game to give it a try? It’s your turn—map out your 70-20-10 and execute.