The 60% Solution Budgeting Method Explained

The 60% solution, popularized by financial columnist Richard Jenkins, sets one primary rule: keep all committed expenses — housing, utilities, debt payments, insurance, food, and other necessities — under 60% of your gross (pre-tax) income. The remaining 40% splits across four smaller buckets.

How the remaining 40% is split

10% for retirement savings
10% for long-term savings (big purchases, sinking funds)
10% for irregular expenses (car repairs, annual bills, gifts)
10% for fun spending, guilt-free

Using gross income is what makes this method distinct

Unlike budgets built around take-home pay, the 60% solution calculates against gross income, which naturally accounts for taxes and pre-tax retirement contributions as part of the structure rather than separately.

Who this method suits best

It works well for people who want fewer categories to track than a zero-based budget but more structure than 'pay yourself first' alone provides. Because the 60% ceiling includes debt payments, it also naturally discourages taking on more fixed obligations than your income can comfortably support.

Frequently Asked Questions

What if my committed expenses are already above 60%?+

That's a signal worth taking seriously — it usually means housing costs, debt payments, or both are too high relative to income, and reducing them (refinancing, downsizing, paying off high-interest debt) should be a priority.

Is the 60% solution better than the 50/30/20 rule?+

Neither is objectively better — the 60% solution forces more explicit savings buckets (retirement, long-term, irregular expenses) rather than lumping them into a single 20%, which some people find easier to actually follow.