The 50/30/20 Budget Rule: A Beginners Guide to Managing Money

If you have never budgeted before, the 50/30/20 rule is the perfect starting point. This simple framework takes the guesswork out of managing your money.

What is the 50/30/20 Rule?

This budgeting method divides your after-tax income into three categories: 50% for Needs, 30% for Wants, and 20% for Savings. It is simple, flexible, and effective.

The Three Categories

Needs (50%): Housing, utilities, groceries, transportation, insurance, and minimum debt payments.

Wants (30%): Dining out, entertainment, hobbies, shopping for non-essentials, and vacations.

Savings (20%): Emergency fund, retirement accounts, extra debt payments, and investments.

Try our interactive 50/30/20 Budget Calculator to see exactly how your income should be divided!