What is the 50/30/20 rule?
The 50/30/20 rule is a simple way to budget your take-home pay. Spend about 50% on needs, the bills you must pay. Spend up to 30% on wants, the things that make life enjoyable. Put at least 20% toward savings and paying off debt.
Enter what you spend today to see where you're over or under each target.
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Example budget
With $5,000 a month in take-home pay:
- Needs (50%)
- $2,500
- Wants (30%)
- $1,500
- Savings (20%)
- $1,000
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When to adjust the rule
- High-cost cities. If rent alone takes 40% of your pay, 60/20/20 may be more realistic.
- High-interest debt. Shift money from wants to debt payoff until cards are cleared.
- Catching up on retirement. Push savings above 20% if you started late.
Frequently asked questions
Is debt a need or a want?
Minimum payments are needs. Anything you pay above the minimum counts toward the 20% savings category.
Should I budget from gross or net pay?
Use net pay, the amount you actually take home. Retirement contributions deducted from your paycheck can count toward savings.
What if I can’t save 20%?
Start with any amount and raise it over time. Saving 5% consistently beats planning to save 20% and never starting.