50 30 20 Budget Calculator

How the 50 30 20 Budget Works

The lean and easy-to-understand 50-30-20 budget calculator has been around since at least the early 2000s. Popularized by Elizabeth Warren in her book, “All Your Worth,” this budget divides 100% of your paycheck (after-tax income) into the three categories: LIVE (needs / necessities) on 50%, Spend 30% on WANTS, and SAVE 20%.

Many consumers feel living on half their income is impossible, which seems true since we overspend as a nation far beyond our needs. Half of our income would include our housing, food, transportation, insurance, doctor visits, communications and clothing. The 30% for Wants would cover dining out, entertainment, non-necessary shopping and cable/satellite TV. The 20% for savings would be divided into short-term savings (vacations, holiday gift giving, car repair and replacement, furniture, appliances, etc.) and long-term investments (retirement, education). 

What is the 50 30 20 rule?

Essentially, the 50 30 20 rule slices up your take-home (after taxes) income and seperate it into three categories: Needs (Necessities), Wants and Savings / Debt.

It allows for the following percentage allotments:

  • 50% of your take-home income to go towards the needs / necessities category.

  • 30% of your take-home income to go towards the wants category.

  • 20% of your take-home income to go towards the savings and repaying debt category.

Use the calculator above to get an idea on how the 50 30 20 rule could work for you.