The 50/30/20 rule explained.
Half of take-home pay for needs, 30% for wants, 20% for savings and debt: where the rule comes from and how to work it out for your pay.
By Suraj Kumar3 min read
The 50/30/20 rule is the simplest budget there is. Here is what it says and where it comes from.
The rule.
Half of take-home pay goes to needs (housing, food, bills), 30% to wants and 20% to savings and paying debt. Elizabeth Warren and Amelia Warren Tyagi set it out in All Your Worth (2005).
An example.
Of $3,000 a month, $1,500 is for needs, $900 for wants and $600 for savings and debt. The page splits any amount, adding up exactly.
When it does not fit.
Where needs cost more than half, the rule shows the gap; a zero-based budget lets you set your own amounts.
Further reading
Topics: 50/30/20 rule · 50 30 20 budget · 50/30/20 budget calculator · needs wants savings · budget rule
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