Middle-aged man
Wealthy families often hire financial planners, tax specialists and investment professionals to help manage their money. But the truth is, many of the habits and systems they rely on aren’t exclusive to high earners — and they don’t require a seven-digit income to put into practice.
Whether you earn $50,000 or $500,000 a year, a straightforward budgeting framework can help you feel more in control of your money. That matters more than many people realize.
A 2025 survey found that just over 500,000 Canadians — less than 2% of the country’s population — earned $200K annually or more in 2020 (1). Meanwhile, rising costs for essentials like groceries, housing, utilities and transportation have left many households struggling to keep up, as incomes fail to match inflation.
The good news is that having financial structure can make a difference. With that said, here’s a closer look at the “15/65/20” system — a simple approach designed to help households build stability, reduce stress and make progress no matter where their starting point is.
The 15/65/20 system is a modern twist on the popular 50/30/20 rule, popularized by U.S. Senator Elizabeth Warren in All Your Worth: The Ultimate Lifetime Money Plan (2).
At its core, the system divides your income into three buckets — savings, essentials and discretionary spending — with one key principle: prioritize saving first.
As billionaire investor Warren Buffett famously stated, “Do not save what is left after spending, but spend what is left after saving (3).” People who build long-term financial security tend to lock in savings before making other spending decisions.
The first step is setting aside 15% of your monthly income for savings and investments. If you’re starting from scratch, that money can help you build an emergency fund to cover several months of essential expenses. Once that safety net is in place, you can shift more of that 15% toward long-term investing.
Next, comes the hardest part: keeping essential expenses to about 65% of your income. That’s challenging because necessities take up a large share of most household budgets. Statistics Canada’s Survey of Household Spending consistently shows that housing, food and transportation are the three biggest expense categories for Canadian households (4).
Story Continues
Small changes in these areas can make a huge difference, such as choosing cheaper housing, driving a lower-cost vehicle, using transit when possible and cutting back on food waste. Even modest savings on essentials can help keep you within the 65% target.
The remaining 20% is for discretionary — or “guilt-free” — spending. This is money you can enjoy without second-guessing, whether that’s shopping, dining out, entertainment, travel or hobbies, because your savings and essentials are already accounted for.
The strength of the 15/65/20 system isn’t about perfection, it’s about clarity. Giving every dollar a job helps build stability while still leaving room for enjoyment.
Read more: Here are 5 expenses that Canadians (almost) always overpay for — and very quickly regret. How many are hurting you?
The 15/65/20 system isn’t a one-size-fits-all solution. It works best as a flexible guideline built around three ideas:
Your own specific situation might call for some changes as you go. For example, many Canadians carry meaningful non-mortgage debt. Equifax Canada reports that the average consumer holds more than $20,000 in non-mortgage debt, which includes credit cards and personal loans (5). If that sounds familiar, it can make sense to focus on paying down high-interest debt before aggressively investing.
Housing costs can also make the 65% target harder to reach. A Rentals.ca survey from 2025 shows that 62% of renters spend 30% of their income on shelter, a level often used to flag housing affordability pressure (6). When rent or housing costs eat up that much of your income, something has to give elsewhere.
Food costs add another layer to necessary expenses. StatCan data show that lower-income households spend a larger share of their income on food than higher-income households, leaving less room for savings or discretionary spending as prices rise (7).
In situations like these, the most realistic move may be to temporarily scale back discretionary spending while you stabilize essentials, or work on boosting your income. The goal isn’t perfection — it’s progress.
The 15/65/20 system isn’t about hitting ideal numbers — it’s about creating structure when money feels stretched. Rising living costs and debt mean many Canadians need to adapt the framework to their reality, whether that’s paying down high-interest debt first, trimming essentials or cutting back on discretionary spending.
Even small changes can add up over time. So, start where you are. Focus on steady progress. And use the system as a guide — not a rulebook — to regain control of your finances.
—With files from Melanie Huddart
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Statista (1); United States Federal Credit Union (2); Corinthian Wealth (3); Statistics Canada (4, 7); Equifax (5); Rentals.ca (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.