The 50/30/20 rule is a simple framework for organizing after-tax income. It can provide a starting point for people who want structure without tracking every transaction.
The three categories
- 50% needs: Housing, utilities, groceries, transportation, insurance, and minimum debt payments.
- 30% wants: Dining out, hobbies, entertainment, travel, and nonessential purchases.
- 20% goals: Emergency savings, retirement contributions, and extra debt payments.
Make it your own
Housing costs or income differences may make these percentages unrealistic. Use the rule as a guide, prioritize essential bills, and adjust the categories to suit your situation.
