What Is the 50/30/20 Rule?
The 50/30/20 rule divides your after-tax income into three categories:
- 50% — Needs: Essential expenses
- 30% — Wants: Discretionary spending
- 20% — Savings: Building wealth and eliminating debt
Try our Budget Planner Calculator to see your allocations.
Breaking Down Each Category
Needs (50%)
Rent, utilities, groceries, insurance, minimum debt payments, transportation.
Wants (30%)
Dining out, entertainment, subscriptions, travel, hobbies, shopping.
Savings (20%)
Emergency fund, 401(k), IRA, extra debt payments, investment accounts.
Use our Net Worth Calculator to see the big picture.
How to Get Started
- Calculate your after-tax income using our Salary Calculator
- Categorize expenses as needs or wants
- Compare to the 50/30/20 targets
- Set up automatic savings transfers
Start with our Budget Planner and take control of your finances today.