50/30/20 Budget Calculator

A simple and effective way to manage your finances. Divide your after-tax income into needs (50%), wants (30%), and savings (20%).

Calculate Your Budget

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Enter your take-home pay after taxes

What is the 50/30/20 Budget Rule?

The 50/30/20 budget rule is a simple and effective method for managing your finances. It divides your after-tax income into three categories:

  • 50% for Needs: Essential expenses like housing, utilities, groceries, transportation, insurance
  • 30% for Wants: Non-essential expenses like dining out, entertainment, hobbies, subscriptions
  • 20% for Savings: Emergency fund, retirement, investments, debt payments beyond minimums

How It Works

This budgeting method was popularized by Senator Elizabeth Warren in her book "All Your Worth: The Ultimate Lifetime Money Plan." It provides a balanced approach to managing money without requiring detailed tracking of every expense category.

Benefits

  • • Simple: Easy to understand and implement
  • • Balanced: Ensures you cover essentials while still enjoying life
  • • Flexible: Adapts to different income levels
  • • Future-focused: Prioritizes savings and financial security

Tips for Success

  • • Be honest about needs vs wants: Housing is a need, but a luxury apartment might be a want
  • • Include all income: Use your total take-home pay, including side income
  • • Review monthly: Your income and expenses may change, so recalculate regularly
  • • Track actual spending: Use hilm.ai to see where your money really goes

Frequently Asked Questions

What counts as "needs"? +

Needs are expenses you cannot avoid: housing, utilities, groceries, transportation to work, insurance, minimum debt payments, and basic healthcare.

What counts as "wants"? +

Wants are expenses that improve your quality of life but aren't essential: dining out, entertainment, hobbies, gym memberships, streaming services, and non-essential shopping.

What if my needs exceed 50%? +

If you live in a high-cost area, your needs might exceed 50%. Try to reduce wants to compensate, or focus on increasing your income. The goal is to get as close to the ratio as possible.

Can I adjust the percentages? +

Yes! The 50/30/20 rule is a guideline. If you're aggressively paying off debt, you might do 50/20/30 (needs/wants/savings). The key is having a plan.

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