Enter your take-home income and pick a budget rule to see exactly how much to allocate to each category.
Rent/mortgage, utilities, groceries, insurance, minimum debt payments, transportation, healthcare
Dining out, entertainment, subscriptions, shopping, vacations, hobbies, upgrades
Emergency fund, retirement (401k/IRA), investments, extra debt payments, down payment fund
The 50/30/20 rule divides your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. Popularized by Senator Elizabeth Warren in her book "All Your Worth," this rule provides a simple framework for managing money without tracking every dollar.
Needs (50%) include housing, utilities, groceries, insurance, minimum debt payments, transportation, and healthcare — expenses you must pay regardless. Wants (30%) cover dining out, entertainment, subscriptions, hobbies, vacations, and upgrades beyond basic needs. Savings (20%) includes emergency fund contributions, retirement savings, extra debt payments, and investments.
For example, on a $5,000 monthly take-home: $2,500 goes to needs, $1,500 to wants, and $1,000 to savings. If your needs exceed 50%, consider the 70/20/10 rule or look for ways to reduce fixed costs.
| Rule | Categories | Best For |
|---|---|---|
| 50/30/20 | Needs / Wants / Savings | Balanced approach, moderate income |
| 70/20/10 | Living / Savings / Debt | Higher cost-of-living areas |
| 80/20 | Spending / Savings | Simple approach, less tracking |
| Custom | Your own splits | Unique situations, aggressive savers |