The 50/30/20 approach is a simple guide: about half of take-home pay for needs, about a third for wants, and about a fifth for savings and paying down debt. It is a starting point, not a rule.
Needs
Housing, utilities, groceries, insurance, transportation, childcare and minimum debt payments.
Wants
Eating out, entertainment, subscriptions, travel, shopping beyond the basics.
Savings and debt
The emergency fund first, then extra debt payments and savings goals.
Adjust for real life
In high-cost areas, needs often take more than half. If so, trim wants first and keep something going to savings every month, even a small amount.
Our 50/30/20 budget planner shows the targets and compares them with what you spend.
General information, not financial advice.
This article is general information, not legal, tax or regulatory advice. Rules change; confirm current requirements with the responsible agency or a licensed professional.
