What is the 50/30/20 rule?
It is a simple budgeting rule popularized by US Senator Elizabeth Warren in All Your Worth. Split your take-home pay (after tax) into three buckets:
- 50% needs: rent or mortgage, utilities, groceries, insurance, transportation, minimum debt payments.
- 30% wants: eating out, entertainment, subscriptions, travel, shopping.
- 20% savings and debt: emergency fund, retirement, investments and paying off debt faster.
Example · $3,200 take-home pay
Needs: $1,600. Wants: $960. Savings and extra debt payments: $640. If your rent alone is $1,400, your needs will be over 50%, so you can adjust to 60/20/20 for a while.
How to use this budget calculator
- Enter your monthly take-home income.
- Add your expenses and assign each one to needs, wants or savings.
- Compare the target for each bucket with what you actually spend, and trim the wants first.
You can change the percentages: in expensive cities 60/20/20 or 70/20/10 is common. The important part is to decide the split on purpose and pay your savings first.
Frequently asked questions
Is debt a need or savings?
Minimum payments are needs. Anything you pay above the minimum goes in the 20% bucket, because it improves your finances just like saving.
How long until I reach my savings goal?
Use the savings goal calculator with the 20% you set aside each month.
More money & finance tools
Compound Interest Calculator
Final balance, interest earned and growth year by year.
OpenLoan & Mortgage Calculator
Monthly payment, total interest and amortization schedule.
OpenNPV and IRR Calculator
Net present value, IRR and payback with discounted cash flows.
OpenSavings Goal Calculator
How much to save each month for your goal, or how long it takes.
OpenSplit Expenses by Income Calculator
Split shared bills 50/50 or by income and see what each person saves.
Open