Financial Expert Recommends '60 20 15' Rule for Effective Money Management
UK savers are being encouraged to adopt a straightforward budgeting strategy known as the '60 20 15' rule to better manage their finances. This method, highlighted by financial expert Nischa Shah, is designed to help individuals save money while reducing financial stress.
Understanding the '60 20 15' Rule
The rule is based on net income, which refers to the take-home pay received after deductions for taxes and National Insurance. From this amount, Shah advises allocating approximately 65 percent to core living costs such as rent, utilities, and groceries.
Key allocations include:
- 20 percent should be set aside for "fun saving," covering expenses like events, personal hobbies, and leisure activities.
- The remaining 15 percent is earmarked for future financial security, including savings, investments, and paying off extra debts.
Flexibility and Personalization
Shah emphasizes that the rule is adaptable. For those living paycheck to paycheck, she suggests starting with smaller percentages, such as saving just 2 to 3 percent initially, and gradually increasing as financial circumstances improve.
Current Savings Trends in the UK
This advice comes at a time when many Brits are actively seeking effective ways to save. Recent data shows that 21 million UK adults are using tax-efficient savings accounts, with about four in ten utilizing ISAs to protect their money from taxation.
Overall, ISA accounts hold approximately £900 billion, indicating a strong desire among people to maximize their savings.
Demographic Insights
As of 2026, savings patterns vary by age group. Over-65s typically have over £64,000 in ISA savings, while those under 25 average around £8,300. In the 2022/2023 tax year, around 2.5 million savers maximized their £20,000 annual ISA allowance.
Shah shared these insights during an episode of The Diary of a CEO podcast with Steven Bartlett, aiming to provide practical guidance for financial well-being.
