What is the 50/30/20 budget?
The 50/30/20 rule is a simple budgeting framework popularized by Senator Elizabeth Warren. It divides your take-home (net) income into three buckets: 50% for needs, 30% for wants, and 20% for savings and debt repayment. This calculator does the math instantly so you know exactly how much to allocate to each category each month.
How to use it
Enter your net monthly income — that's the amount that actually lands in your bank account after tax and other payroll deductions. The calculator splits it into the three buckets and shows the dollar amount for each.
The formula
For a net income of \(N\):
$$\begin{aligned} \text{Needs} &= 0.5 \times N \\ \text{Wants} &= 0.3 \times N \\ \text{Savings} &= 0.2 \times N \end{aligned}$$The three buckets always add back up to 100% of your income.
Worked example
Suppose your net monthly income is $4,000.
$$\begin{aligned} \text{Needs} &= 0.5 \times 4{,}000 = \$2{,}000 \\ \text{Wants} &= 0.3 \times 4{,}000 = \$1{,}200 \\ \text{Savings \& debt} &= 0.2 \times 4{,}000 = \$800 \end{aligned}$$Together: \(2{,}000 + 1{,}200 + 800 = \$4{,}000\).
FAQ
What counts as a "need"? Essentials you can't easily skip: rent or mortgage, utilities, groceries, insurance, minimum loan payments and transport to work.
What goes in "wants"? Lifestyle spending such as dining out, streaming subscriptions, hobbies, travel and upgrades beyond the basics.
Should I use gross or net income? Use net (take-home) income. The rule is built around the cash you actually receive after taxes.
