50 30 20 (2024)

FAQs

50 30 20? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Is the 50/30/20 budget rule right for you? The 50/30/20 rule can be a good budgeting method for some, but it may not work for your unique monthly expenses. Depending on your income and where you live, earmarking 50% of your income for your needs may not be enough.

Alternatives to the 50/30/20 budget method

For example, like the 50/30/20 rule, the 70/20/10 rule also divides your after-tax income into three categories but differently: 70% for monthly spending (including necessities), 20% for savings and for 10% donations and debt repayment above the minimums.

The rule is a template that is intended to help individuals manage their money, to balance paying for necessities with saving for emergencies and retirement. People who follow the 50/30/20 rule can simplify it by setting up automatic deposits, using automatic payments, and tracking changes in income.

Our 50/30/20 calculator divides your take-home income into suggested spending in three categories: 50% of net pay for needs, 30% for wants and 20% for savings and debt repayment. Find out how this budgeting approach applies to your money.

Allow up to 50% of your income for needs, including debt minimums. Leave 30% of your income for wants. Commit 20% of your income to savings and debt repayment beyond minimums. Track and manage your budget through regular check-ins.

The rule suggests you direct 50% of your after-tax income toward needs, 30% toward wants, and 20% toward savings and debt.

The first 10 percent of your income should be set aside in savings. That includes regular, emergency and retirement savings. The second 10 percent is what you give away to charity (schools, church, community). The remaining 80 percent is what you live on.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

Try the 50/30/20 budget

First, calculate your net income (again, this is your take-home pay, or your after-tax income). From there, set aside 50% of your take-home pay for rent, utilities, groceries, transportation, insurance, and other living essentials that typically cost the same month to month.

Can you live off $1000 a month after bills? ›

Getting by on $1,000 a month may not be easy, especially when inflation seems to make everything more expensive. But it is possible to live well even on a small amount of money. Surviving on $1,000 a month requires careful budgeting, prioritizing essential expenses, and finding ways to save money.

The average monthly expenses for one person in 2022 were $3,693, up 8.5% from 2021. That translates into an increase of $287.75 per month. The 2022 average for annual expenses was $44,312. That is less than half of the average expenses for a family of four, which was over $100,000.

The 50/30/20 rule allows you to set aside a portion of your income for flexible spending while still meeting your financial goals. Because this budgeting method leaves room for spending money on things you want even if you may not need them, it can be easier to stick to than a more strict personal finance strategy.

The 60/30/10 budgeting method says you should put 60% of your monthly income toward your needs, 30% towards your wants and 10% towards your savings. It's trending as an alternative to the longer-standing 50/30/20 method.

In the golden rule, a budget deficit and an increase in public debt is allowed if and only if the public debt is used to finance public investment.

Some Experts Say the 50/30/20 Is Not a Good Rule at All. “This budget is restrictive and does not take into consideration your values, lifestyle and money goals. For example, 50% for needs is not enough for those in high-cost-of-living areas.

While the world of personal finance provides a percentage guideline for how much of your money should go toward housing, this rule is a little outdated in 2024. Rent prices are down from their peak in August of 2022, but they're still dramatically higher than before the pandemic.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.

Financial Goals: 20%

If you're not aggressively saving for the future—funding an IRA or 401(k), a 529 plan if you have kids, or another retirement plan, if possible—you're setting yourself up for hard times ahead. This is where the final 20% of your monthly income should go.