Guides / Budget methods
The 50/30/20 budget
Half for needs, 30% for wants, 20% for savings: a simple starting point.
The 50/30/20 rule splits take-home pay into three parts. It's popular because it's simple, and it works best as a starting point rather than a strict rule.
How it works
- About 50% of take-home pay for needs
- About 30% for wants
- About 20% for savings and extra debt payments
When it doesn't fit
In high-cost areas, needs alone can take far more than half. That's common. Use the split to see the gap, then adjust: a 60/20/20 or 70/20/10 budget is still a budget.
Try it
Our budget calculator shows the 50/30/20 split for your take-home pay and compares it with what you really spend.
General educational information, not financial advice. The Pennies Budget isn't paid by any company mentioned here.