It’s no secret that the American economy is a mess. People are living paycheck-to-paycheck, and the notion of saving or even cutting back is laughable. However, the extent to which things have gone sideways comes into even sharper focus when you consider the most common budgeting advice typically endorsed by finance experts. The recommendations are so out of reach for most people in today’s economy that it almost seems ridiculous.
It used to be common financial advice that you should never pay more than 30% of your income for housing, a rule that seems quaintly insane in today’s ludicrous housing market. The median U.S. household income in the first quarter of 2025 was $5,174 a monthand 30% of that is $1552.20. But the average rent in the US? $1850 — but only after falling from $2079 when the stock market tanked in April.
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But that’s far from the only conventional financial wisdom that no longer applies to most people. The 50-30-20 rulepopularized by Senator Elizabeth Warren, which has long been the go-to budgeting advice from many financial gurus, is pretty much impossible for most of us, too.
The rule says that 50% of your income should go to basic living expenses like housing, utilities, food, and transportation; 20% should go to savings and investments and/or paying down debt; and 30% should go to everything else. If you’re cackling aloud at the ceiling like a hyena just reading that, you are certainly not alone.
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Really, you need look no further than the average rent mentioned above, which accounts for nearly 36% of the aforementioned median income. That would leave just 14%, or $724.36 each month, for literally every other necessity like utilities, groceries, transportation, phone bills, health insurance premiums, and on and on and on. It’s incredibly easy for a single person to spend that just on groceries alone each month.
But here’s the catch: Averages and medians mean a ton of people are spending far more, and some indexes tracking home prices have found that housing prices have spiked by nearly 50% since 2020. And accordingly, a 2024 survey of more than 1,000 Millennials and Gen Z’ers found that 52.97% spend more than half their income on housing.
Then there’s the price of everything else. As of November 2024, the Consumer Price Index, the government’s tracking of prices on basically everything we buy and use, has risen 21.7% since February 2020the final halcyon days before the pandemic sent the economy haywire. (Crucially, financial experts say the CPI does a notoriously poor job of capturing housing costsso in actuality, this rise is probably much higher.)
Meanwhile, while wages have surged in recent years, wage growth has still fallen short of price increases. Which means the costs of the basics for just about everyone have blown way past that 50% rule, cutting into the 20% that’s meant to be for savings, investments, and debt payments.
Debt alone currently swallows an average of 11% of Americans’ monthly income. For a lot of people, that means there’s nothing left to save, a situation that is borne out by the U.S. Bureau of Economic Analysis data, which shows savings rates have declined recently.
As for that remaining 30% for “everything else,” which includes everything from our social lives to unexpected emergencies? Well, let’s just say it’s not surprising that most experts say all those people you see constantly vacationing on TikTok are doing it all on credit cards.
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So what are people supposed to do if the 50-30-20 rule is out the window? Many experts recommend revising it to 60-30-10 instead. For that $5,174 median income above, that would be around $3,104 per month on housing and basics, around $1,552 for incidentals and discretionary spending, and $517 for savings or debt payments.
Experts also suggest people start with 60-30-10 and give themselves five years to work toward 50-30-20, especially if they’re a Gen Z’er who’s still many years away from retirement.
Still, with even that 10% figure being less than the 11% of income the average American is spending on debt payments every month these days, it’s hard to feel exactly like this is a silver bullet financial solution. But it’s a heck of a lot closer to today’s reality, which is something.
Perhaps the most important thing to remember is that saving literally anything at the end of the month is still progress. And in this day and age, letting that just be good enough might be the real key to not letting the economic forces make you feel totally stymied.
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John Sundholm is a writer, editor, and video personality with 20 years of experience in media and entertainment. He covers culture, mental health, and human interest topics.
