The 50-30-20 Budget Rule
Key Takeaways
- The 50-30-20 budget splits your money into three categories.
- 50% of your money goes towards your needs, 30% toward your wants, and 20% toward your savings.
- This is one of the most common budgeting splits used.
Are you ready to make some real money moves?
The 50-30-20 budget splits your money into the following three categories:
1. Needs
2. Wants
3. Savings
1. Needs (50%)
Fifty (50%) of your income should be allocated for needs. Examples of needs are as follows:
- Housing
- Transportation
- Food
- Utilities
2. Wants (30%)
While you should take care of your needs first, you should also enjoy the fruits of your labor. For this reason, the 50-30-20 budget allocates 30% of your income to your wants. Examples of wants are as follows:
- Shopping
- Entertainment
- Subscriptions
- Eating out
3. Savings (20%)
Twenty (20%) of your budget is for savings or debt payments. Examples of what should be paid with this 20% of your budget include the following:
- Building your emergency fund
- Repaying loans, such as credit cards or student loans