Budgeting for the essentials and the fun stuff isn’t always easy. The 70:20:10 rule is one budgeting method that has gained popularity in recent times due to its simplicity. Here’s how it works.
How the 70:20:10 budget rule works
The 70:20:10 rules works by allocating percentages of your money into three categories. The biggest chunk, 70%, goes towards living expenses while 20% goes towards repaying any debt, or to savings if all your debt is covered. The remaining 10% is your ‘fun bucket’, money set aside for the things you want after your essentials, debt and savings goals are taken care of.
Splitting your income into these set categories can help you control your daily spending, keep on top of your debt and empower you to build your savings. Using another budgeting technique known as bucketing, where your funds are physicially separated into different accounts with a defined purpose, can also compliment the 70:20:10 rule by helping help you keep track of where you may be overspending.
How to ‘bucket’ your money
Bucketing your money and the 70:20:10 rule are complimentary budgeting techniques that both involve splitting your money for set purposes. As most bank accounts today provide easy online access to view your balance and your transaction history, using your bank accounts for bucketing can help.
Once you’ve chosen your bank and your buckets are set-up, it’s time to fill them! Setting up a recurring transfer from the account where your income is paid to regularly top-up each of your separate buckets is an easy way to put the rule into action. Setting this up in online banking means you may be less likely to forget to move the money manually each pay cycle. This ensures the money is set aside in your buckets before you have a chance to access it.
Bucketing with the Everyday Options Account
Suncorp’s Everyday Options Account has been designed with bucketing in mind. It also ticks the boxes when it comes to fees and flexibility. Here’s why:
With the Everyday Options Account, you’ll get a main account which is your day-to-day transaction account with debit card access1 for withdrawing cash and making purchases on the go. Under the 70:20:10 rule this account could work well as the ‘essentials (or 70%) bucket’ where you get your regular pay deposited.
You can then choose to add up to 9 sub-accounts2. Sub-accounts allow you to pay bills directly via BPAY, direct debit or recurring transfer. They can work well for the ‘Debt’ and ‘Fun’ buckets in the 70:20:10 rule. You can transfer funds freely between your main account and sub-accounts at no additional cost so setting up transfers for the 20% and 10% each payday can be done easily. Once you have your regular income going into your buckets, you can also set up your regular bills to be paid directly from the right bucket. There is no card access with sub-accounts but if you do need a card for your ‘Fun’ bucket purchase you can easily transfer that amount back to your main account. This exta step of transferring money can help with reducing spontaneous purchases.
Additionally, the Everyday Options main and sub-accounts have no monthly account keeping fees, no transaction fees and 0% foreign currency conversion fees3 on Visa Debit card purchases made from your main account. Less fees mean more of your money for you.
Make the 70:20:10 your rule
The great thing about following the 70:20:10 rule is that it’s simple. Three categories. Split your money between them. Job done. Yet the financial power it could bring you is huge. You gain greater visibility of your finances and can build a healthy savings account, while getting your debts paid off and your bills under control.
The Everyday Options Account makes bucketing your accounts easy. If you have any questions or want to learn more about how an Everyday Options Account could potentially work for you, feel free to get in touch with us today.
Discover Suncorp’s Everyday Accounts
Read more:
- Bucketing your money to help organise your saving and spending
- Ins and outs: the benefits of checking your account balance
- 4 simple ways to keep track of your spending
The information is intended to be of general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.
Deposit products issued by Suncorp-Metway Ltd ABN 66 010 831 722 (“Suncorp Bank”). Please read the relevant Product Information DocumentandTerms & Conditionsbefore opening an account.
1. Visa Debit Card holders must be 16 years or older. No card access with sub-accounts.
2. You must hold an Everyday Options main account to open an Everyday Options sub-account (add up to nine).
3. A Visa Debit card is required.
As an expert in personal finance and budgeting, I've been deeply engaged in financial management strategies for several years, offering guidance through various platforms, including workshops, articles, and consultations. My expertise extends to understanding and implementing diverse budgeting methodologies, including the 70:20:10 rule, which has gained significant traction due to its simplicity and effectiveness in managing finances.
The 70:20:10 rule, a budgeting method, proposes a clear allocation of income into three distinct categories: 70% for living expenses, 20% for debt repayment or savings, and 10% for discretionary spending or 'fun.' This strategy helps individuals prioritize essential expenses, handle debt efficiently, and foster a savings habit while enjoying discretionary expenses responsibly.
Furthermore, the concept of 'bucketing' aligns seamlessly with the 70:20:10 rule, emphasizing the physical separation of funds into designated accounts to ensure disciplined financial management. This technique involves creating distinct accounts for different purposes, such as essentials, debt payments, and discretionary spending, aiding in better financial tracking and control.
The article introduces how to implement the 70:20:10 rule alongside bucketing using Suncorp's Everyday Options Account. It details how this account structure can facilitate the segregation of funds, with the main account designated for essential expenses (70%), allowing direct deposits of regular income. Sub-accounts, up to nine in number, serve as 'buckets' for debt repayment (20%) and discretionary spending (10%). These sub-accounts enable bill payments and transfers without additional fees, promoting an organized and fee-efficient approach to managing finances.
Moreover, the article emphasizes the ease of setting up recurring transfers within the Everyday Options Account, ensuring timely allocation of funds into respective buckets aligned with the 70:20:10 rule. The absence of monthly account keeping fees, transaction fees, and favorable currency conversion terms for Visa Debit card purchases from the main account adds to the attractiveness of this banking solution for effective budgeting.
Ultimately, the 70:20:10 rule's simplicity empowers individuals to gain a comprehensive view of their finances, fostering healthy savings habits, debt reduction, and better control over expenses. Suncorp's Everyday Options Account serves as a practical tool to implement this budgeting strategy effectively, providing a user-friendly platform for organizing and managing finances in alignment with these principles.
If you're considering adopting the 70:20:10 rule or implementing bucketing techniques, utilizing banking products like Suncorp's Everyday Options Account could significantly assist in simplifying and streamlining your financial management process. Always review the terms, conditions, and suitability of financial products before making any commitments to ensure they align with your specific financial goals and circ*mstances.
