What is the 30:30:30:10 rule when it comes to finances and how should you use it?

The new 20 pound bank note is displayed during a photo opportunity at the Tate Britain in London, Thursday, Feb. 20, 2020.
The new 20 pound bank note is displayed during a photo opportunity at the Tate Britain in London, Thursday, Feb. 20, 2020. Copyright Frank Augstein/Copyright 2020 The AP. All rights reserved
Copyright Frank Augstein/Copyright 2020 The AP. All rights reserved
By Indrabati Lahiri
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The 30:30:30:10 rule can be applied to both income and pension planning and can go a long way in helping you budget, achieve retirement goals and reduce portfolio risk.


Pension planning has been a key topic in the last few months, amid the current economic uncertainty involving higher interest rates, rising inflation and the cost of living crisis in many countries. This has left some workers wondering if they are saving enough for their pensions, and if not, worrying about how to attain their retirement goals in a sustainable and comfortable way.

This, in turn, has resulted in the rise of a variety of financial and pension planning rules, concerning how might be the best and most efficient way to apportion your money. According to various financial experts, these rules can help you better budget, as well as make sure you're saving a consistently appropriate amount for the future.

How does it work?

One of the most popular rules, the 30:30:30:10 rule, can be applied both in terms of income planning, as well as pension planning. The income planning version says that you put 30% of your income towards day-to-day expenses, 30% towards investments, 30% for retirement savings and 10% for emergency expenses.

Robbert Mulder, operating partner at Senior Capital explained about the 30:30:30:10 income planning rule, in an email note: "As Europe grapples with an ageing population, innovative retirement planning strategies are essential. The 30:30:30:10 income planning rule offers a structured approach where individuals allocate 30% of their income to living expenses, another 30% to retirement savings, 30% to investments and 10% for unexpected needs.

"While this method helps people manage their finances effectively and prepare for the future, it might come too late for those close to retirement, or already retired. These individuals need to explore other possibilities to secure their financial stability, especially considering the uncertainty of investment returns.

"Equity release mortgages are gaining popularity in Europe as a viable option for retirees. These mortgages allow homeowners to access the equity in their homes to supplement their retirement income without the immediate need to pay interest, providing a stable financial option amid uncertain investment returns.

"The increasing popularity of equity release mortgages is a natural response to the societal challenges faced by many European countries. These financial tools provide retirees with a valuable opportunity to enhance their financial flexibility. By unlocking the equity in their homes, retirees can increase their disposable income, thereby directly improving their quality of life in retirement.

"When carefully managed with expert guidance, this option not only addresses the immediate need for financial security but also balances long-term objectives, such as maintaining financial health and safeguarding inheritance for future generations.

"Overall, while traditional savings strategies like the 30:30:30:10 rule are beneficial, retirees and those nearing retirement must consider additional financial products like equity release mortgages to ensure both immediate stability and long-term peace of mind."

The 30:30:30:10 income planning rule offers a structured approach where individuals allocate 30% of their income to living expenses, another 30% to retirement savings, 30% to investments and 10% for unexpected needs.
Robbert Mulder, Senior Capital partner

However, in the current financial climate, with higher cost of living and rising inflation, several people may have found that their money is not going as far as before, leading them to potentially cut down on anything which may not be absolute essentials such as rent, bills and groceries.

In such cases, retirement savings and investments are often among the first to be cut as well, with several people feeling as though they can't afford them at present, or that they will definitely have the opportunity to make up for lost savings down the line. This also happens in case of layoffs and other financial emergencies.

How the 30:30:30:10 pension planning rule can reduce risk for you

The 30:30:30:10 pension planning version of the rule talks about what to do with the portion of your income you've already set aside for retirement and investments. This rule advocates for directing 30% of your savings into bonds, 30% into property, 30% in stocks and 10% in cash and cash equivalents.

This can go a long way in helping your money be apportioned in the most efficient and profitable way, which can be much better in the long run than just letting it sit in a savings account. This is due to most savings accounts not paying interest rates that are high enough to combat the current rate of inflation. This means that if high inflation persists, your savings may well be significantly eroded by the time you reach retirement.

The time value of money, which essentially says that €1 today, is likely to be worth quite a bit more than €1 in 20 or 30 years, also helps in shrinking the value of your savings over the years. In this way, using the above rule can help you significantly beat the risk of inflation.

The 30:30:30:10 pension planning rule also ensures that, by spreading out your money among a variety of assets such as stocks, bonds, real estate and cash, you are considerably reducing your portfolio risk. In case of emergencies, you still have access to ready cash, through the 10% of your portfolio allocated to cash and cash equivalents, without needing to dip into any of your longer-term investments.

It is important to remember that the 30:30:30:10 pension planning rule, as with any other financial or retirement planning rule, is not a one-size-fits-all rule and should only be used keeping your own risk tolerance, financial goals and available funds in mind.

In several cases, you may find that tweaking the specific percentages to suit your individual goals may work better for you. You could, for example, allocate a higher percentage to stocks, or a lower percentage to bonds, depending on your risk preference.


If in doubt, always talk to an independent financial adviser who should be able to help you come up with a tailored pension saving plan for your specific needs. They should also be able to offer useful solutions on the best way to achieve your goal, however far in the distance it may seem.

Disclaimer:This information does not constitute financial advice, always do your own research on top to ensure it’s right for your specific circumstances. Also remember, we are a journalistic website and aim to provide the best guides, tips and advice from experts. If you rely on the information on this page, then you do so entirely at your own risk.

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