Example breakdown:
Example breakdown:
Example breakdown:
How the 50/30/20 Rule Works
50% Needs
Essential expenses like rent, utilities, groceries, insurance, and minimum debt payments.
30% Wants
Non-essential spending like dining out, entertainment, subscriptions, and hobbies.
20% Savings
Financial goals like emergency fund, retirement, investments, and extra debt payments.
Frequently Asked Questions
What is the 50/30/20 budget rule?
The 50/30/20 rule is a simple budgeting method popularized by Senator Elizabeth Warren. It divides your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment.
Should I use gross or net income?
Use your net income (take-home pay after taxes). This gives you a more accurate picture of the money you actually have available to budget.
What if I can't fit my expenses into these percentages?
The 50/30/20 rule is a guideline, not a strict rule. If you live in a high cost-of-living area, you may need to adjust. Start with this framework and modify it to fit your situation.
How can I track my budget more effectively?
Using a budgeting app like iBudget can help you automatically categorize your spending and track progress toward your budget goals. Sign up free to get started!
Ready to take control of your finances?
Sign up for iBudget to track your spending, set budgets, and get personalized insights about your finances.