Managing money has never been harder. Between rising rent, higher grocery prices, and bills that keep climbing, it can feel like your pay just doesn’t stretch as far as it used to.
Having a few simple ‘money rules’ up your sleeve can really help. Here’s a look at some classic money rules and how they stack up in 2025.
The 50-30-20 rule:
The 50-30-20 rule is one of the easiest budgeting tools around and divides your income as follows:
- 50% for needs: essentials like housing, bills, transport, and groceries
- 30% for wants: things you enjoy but could cut back on if needed
- 20% for savings and debt: including emergency savings, super, or extra repayments
While this rule still works in theory, the truth is that many people are now spending more money on essentials with less going towards their wants and savings. If you find the original rule to be a little out of touch, adjust the ratio to something more realistic such as 60-25-15 or 70-20-10.
The 3–6 month emergency fund rule:
Having money set aside for the unexpected is one rule that never goes out of date.The goal is to save three to six months’ worth of essential expenses (things like rent or mortgage, groceries, transport, and bills) in an emergency fund.
If your monthly expenses are $3,500, that means aiming for between $10,500 and $21,000 saved. That might sound like a lot, but you don’t have to get there overnight, start small and build it gradually. With rising costs and job uncertainty, it’s peace of mind knowing you could cover life’s curveballs without having to take on additional debt.
The 3× rent rule:
The old ‘3× rent rule’ says your monthly income should be around three times your rent, meaning rent should take up roughly 30% of your income.
In today’s rental market, that’s not always realistic and the rules should be used more as a warning sign. If rent is taking up more than half your income, it might be time to explore options like moving in with a flatmate, looking at suburbs further out of town, or negotiating a better deal with your landlord as your lease comes to an end.
The 24-hour (or 24-10) rule:
With online shopping and “buy now, pay later” everywhere, impulse spending is easier than ever. That’s why the 24-hour rule is still one of the smartest habits to have. Before buying something you don’t really need, wait 24 hours. If you still want it after that time, and it fits your budget, then go ahead, but often you’ll find the urge passes.
For more expensive items like a car, furniture, or new tech, follow the 24-10 rule - wait 24 hours and only buy if you can afford at least a 10% deposit (or full payment upfront). It’s a simple way to avoid regret and unnecessary debt.
The 4% rule for retirement:
The 4% rule is a guide for how much you can safely withdraw each year from your retirement savings. It suggests that if you only take out 4% annually, your money should last around 30 years. For example, if you want $50,000 a year in retirement income, you’d need around $1.25 million saved.
This rule is based on historical averages and steady market growth, something that is now a little less predictable. While the percentage may no longer be quite the same due to inflation and people living longer, the principle remains the same in that it’s better to give yourself a comfortable but sustainable drawdown over time.
The 2× investing rule:
The ‘2× investing rule’ is more of a mindset than a formula. It’s the idea that with time and compounding, the money you invest should eventually double in value. How long it takes depends on your returns, and that’s where the Rule of 72 comes in handy.
The Rule of 72:
This is a quick way to estimate how long it will take for your money to double. Simply divide 72 by your annual rate of return. If your investments earn 6% a year, your money would double in about 12 years (72 ÷ 6). If you earn 8%, it would double in around 9 years.
While returns can vary, the rule is a simple reminder of why investing early and consistently can make a big difference over time.
The 20/4/10 rule for buying a car:
Cars are expensive, and with prices higher than ever, it’s easy to overspend. The 20/4/10 rule can help you stay within your means:
- 20% deposit: pay this upfront
- 4 years: keep the loan term under 4 years
- 10% of income: aim to spend no more than 10% of your gross monthly income on total car costs (including loan, fuel, insurance, and rego)
If 10% feels impossible with current costs, try not to go beyond 15%. The less your car costs to run, the more freedom you’ll have elsewhere in your budget.
The 1% home maintenance rule:
If you own a home, this rule helps you plan ahead for repairs and upkeep. The idea is to save around 1% of your home’s value each year for maintenance.
For a $700,000 property, that’s $7,000 annually. Some years you’ll use more, some less, but setting money aside regularly helps you avoid financial surprises when the roof leaks, you find termites, or the hot water system dies.
The pay-yourself-first rule:
This one is easy and still rings true - as soon as your pay hits your account, transfer money straight into savings or investments before spending anything else. Even $20 or $50 a week adds up over time. Treat it like any other bill, one that pays your future self. If you wait until the end of the month to save “what’s left,” you’ll usually find there’s nothing left.
While money rules may shift with the times, one thing never changes, the more you understand and plan for your finances, the more control and peace of mind you’ll have.
This information provides general advice only. We do not provide advice based on any consideration of your personal objectives, needs or circumstances.
