The 50/30/20 rule
- 50% needs: rent or mortgage, utilities, groceries, transportation, insurance and minimum debt payments.
- 30% wants: dining out, entertainment, subscriptions, travel.
- 20% savings: emergency fund, retirement and extra debt payments.
Example
With $4,500 a month in take-home pay: $2,250 for needs, $1,350 for wants and $900 for savings, which adds up to $10,800 a year.
Frequently asked questions
What if my needs are more than 50%?
That is common in high-cost cities. Start by protecting the 20%, even if smaller, and trim wants first.
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.