The 50/30/20 Rule
A simple budgeting split: 50% needs, 30% wants, 20% savings and debt payoff.
The 50/30/20 rule is a starting-point budget framework: roughly 50% of after-tax income goes to needs (housing, food, utilities, minimum debt payments), 30% to wants (everything discretionary), and 20% to savings and extra debt paydown. It's a rough guideline, not a rule — high cost-of-living areas often push "needs" well past 50%.
Worked Example
On $5,000/month take-home pay, the rule suggests roughly $2,500 for needs, $1,500 for wants, and $1,000 for savings and extra debt payments — a starting point to adjust from, not a hard ceiling.
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