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The 20/10 rule of thumb limits consumer debt payments to **no more than 20% of your annual take-home income and no more than 10% of your monthly take-home income**. This guideline can help you limit the amount of debt you carry, which is important for your financial health and your credit score.

Make sure that **no more than 36% of monthly income** goes toward debt.

Senator Elizabeth Warren popularized the so-called "50/20/30 budget rule" (sometimes labeled "50-30-20") in her book, All Your Worth: The Ultimate Lifetime Money Plan. The basic rule is to **divide up after-tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings**.

This means that **total household debt (not including house payments) shouldn't exceed 20% of your net household income**. (Your net income is how much you actually “bring home” after taxes in your paycheck.) Ideally, monthly payments shouldn't exceed 10% of the NET amount you bring home.

A Critical Number For Homebuyers

One way to decide how much of your income should go toward your mortgage is to use the 28/36 rule. According to this rule, **your mortgage payment shouldn't be more than 28% of your monthly pre-tax income and 36% of your total debt**. This is also known as the debt-to-income (DTI) ratio.

With the 35% / 45% model, **your total monthly debt, including your mortgage payment, shouldn't be more than 35% of your pre-tax income, or 45% more than your after-tax income**. To calculate how much you can afford with this model, determine your gross income before taxes and multiply it by 35%.

According to Brown, you should spend **between 28% to 36% of your take-home income** on your housing payment. If you make $70,000 a year, your monthly take-home pay, including tax deductions, will be approximately $4,530.

“The 70/30 method is **a budgeting technique to help you allocate your money**,” Kia says. Put simply, each month, 70% of the money that you earn will be your spending money, including essentials like bills and rent as well as luxuries, and 30% of the money you earn will go towards your savings.

If you choose a 70 20 10 budget, you would allocate **70% of your monthly income to spending, 20% to saving, and 10% to giving**. (Debt payoff may be included in or replace the “giving” category if that applies to you.) Let's break down how the 70-20-10 budget could work for your life.

How the 70/20/10 Budget Rule Works. Following the 70/20/10 rule of budgeting, **you separate your take-home pay into three buckets based on a specific percentage**. Seventy percent of your income will go to monthly bills and everyday spending, 20% goes to saving and investing and 10% goes to debt repayment or donation.

Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double. Just **take the number 72 and divide it by the interest rate you hope to earn**. That number gives you the approximate number of years it will take for your investment to double.

Fast answer: A general rule of thumb is to have one times your annual income saved by age 30, **three times** by 40, and so on.

**Yes, saving $2000 per month is good**. Given an average 7% return per year, saving a thousand dollars per month for 20 years will end up being $1,000,000. However, with other strategies, you might reach over 3 Million USD in 20 years, by only saving $2000 per month.

The basic rule of thumb is to **divide your monthly after-tax income into three spending categories: 50% for needs, 30% for wants and 20% for savings or paying off debt**. By regularly keeping your expenses balanced across these main spending areas, you can put your money to work more efficiently.

One popular rule of thumb is the 30% rule, which says to **spend around 30% of your gross income on rent**. So if you earn $2,800 per month before taxes, you should spend about $840 per month on rent. This is a solid guideline, but it's not one-size-fits-all advice.

Generally speaking, a good debt-to-income ratio is anything **less than or equal to 36%**. Meanwhile, any ratio above 43% is considered too high.

With this budget, you will use 60% of your take-home pay to build your savings, invest, or pay off debt. Next up, you will spend 30% on your needs. These might include your food, housing, utilities, healthcare, and transportation. Finally, you use the remaining 10% of your budget to pay for discretionary spending.

The 50/30/20 rule is a simple way to budget that doesn't involve a lot of detail and may work for some. That rule suggests you should spend **50% of your after-tax pay on needs, 30% on wants, and 20% on savings and paying off debt**.

By age 30: **the equivalent of your annual salary saved**; if you earn $55,000 per year, by your 30th birthday you should have $55,000 saved. By age 40: three times your income. By age 50: six times your income. By age 60: eight times your income.

70% is for monthly expenses (anything you spend money on). 20% goes into savings, unless you have pressing debt (see below for my definition), in which case it goes toward debt first. 10% goes to donation/tithing, or investments, retirement, saving for college, etc.

Warren Buffett once said, “The first rule of an investment is **don't lose [money]**. And the second rule of an investment is don't forget the first rule.

Results. A salary of $70,000 equates to a monthly pay of $5,833, weekly pay of $1,346, and an hourly wage of **$33.65**.

For homes in the $800,000 range, which is in the medium-high range for most housing markets, DollarTimes's calculator recommends buyers bring in **$119,371 before tax**, assuming a 30-year loan with a 3.25% interest rate.

**Multiply Your Annual Income by 2.5 or 3**

Simply take your gross income and multiply it by 2.5 or 3 to get the maximum value of the home you can afford. For somebody making $100,000 a year, the maximum purchase price on a new home should be somewhere between $250,000 and $300,000.

**It's definitely possible to buy a house on a $50K salary**. For many borrowers, low-down-payment loans and down payment assistance programs are putting homeownership within reach. But everyone's budget is different. Even people who make the same annual salary can have different price ranges when they shop for a new home.