50/30/20 Budget Calculator

The 50/30/20 Budgeting Rule

The 50/30/20 rule is a simple budgeting method that divides your after-tax income into three categories: needs, wants, and savings. It was popularized by Senator Elizabeth Warren in her book "All Your Worth: The Ultimate Lifetime Money Plan."

50% - Needs (Essential Expenses)

These are expenses you cannot avoid:

• Housing (rent or mortgage)
• Utilities (electricity, water, gas)
• Groceries and essential food
• Transportation (car payment, insurance, gas, public transit)
• Healthcare and insurance
• Minimum debt payments
• Childcare

30% - Wants (Discretionary Spending)

Things you enjoy but could live without:

• Dining out and takeout
• Entertainment (movies, concerts, streaming services)
• Hobbies and sports
• Shopping for non-essentials
• Vacations and travel
• Gym memberships
• Premium cable or phone plans

20% - Savings & Debt Repayment

Building your financial future:

• Emergency fund (3-6 months of expenses)
• Retirement savings (401k, IRA)
• Investment accounts
• Extra debt payments (beyond minimums)
• Savings for major purchases
• Down payment savings

Tips for Success

• Start by tracking your current spending for 1-2 months
• Be honest about needs vs. wants
• Adjust the percentages if needed (e.g., 60/20/20 in high-cost areas)
• Automate savings to make it easier
• Review and adjust your budget monthly
• Cut wants before needs if you're overspending

Note: This rule is a guideline. Adjust based on your personal circumstances, location, and financial goals. High-cost living areas may require different allocations.