Split your monthly take-home income into needs, wants, and savings using the 50/30/20, 60/20/20 or 40/30/20/10 budgeting rules, then compare the plan with what you actually spend.
Enter what you really spend to see how it compares with your plan.
The 50/30/20 rule, popularized by Elizabeth Warren and Amelia Warren Tyagi in their book All Your Worth, divides your after-tax income into three buckets: 50% for needs, 30% for wants, and 20% for savings and extra debt payments. This calculator multiplies your monthly take-home income by each percentage to show a dollar amount for every bucket, and multiplies the savings bucket by 12 to show how much you would save in a year.
You are not locked into the classic split. Pick a quick preset such as 60/20/20, 70/20/10 or 40/30/20/10, or type your own percentages. If they do not add up to 100%, the calculator tells you, so that every dollar of income has a job. If you also enter what you actually spend on needs and wants, it shows what is left for savings and whether that is ahead of or behind your plan.
Because the rule applies to take-home pay, you may need to work that number out first. The Salary and Take-Home Pay Calculator and the Paycheck and Overtime Calculator can help.
The line between a need and a want is not always sharp. Groceries are a need, but a large share of a restaurant bill is a want. Use your own judgment and stay consistent.
On a $5,000 monthly take-home income, the standard 50/30/20 split works out to $2,500 for needs, $1,500 for wants, and $1,000 for savings and extra debt payments. Saving $1,000 a month adds up to $12,000 a year.
Now compare that plan with real spending. Suppose you spend $3,100 on needs and $1,000 on wants. Your needs take 62% of income, which is $600 more than the plan allows, and your wants take 20%, which is $500 less. That leaves $900 for savings, or 18% of your income, only $100 short of the $1,000 target. The calculator shows the same comparison, so you can see which category to adjust.
The 50/30/20 rule is a starting point. Here is what a few common variations look like on a $5,000 monthly income:
The 60/20/20 rule puts 60% of take-home pay toward needs and fixed commitments, 20% toward wants, and 20% toward savings. It keeps the same 20% savings target as 50/30/20 but gives needs 10 more points, taken from wants. That makes it more realistic where rent, childcare or insurance are expensive. On a $4,000 monthly take-home income it works out to $2,400 for needs, $800 for wants and $800 for savings, which is $9,600 saved in a year. Choose the 60/20/20 preset above to see your own numbers.
Here is the 60/20/20 split at a few common incomes. Needs and wants use the same monthly figure below; the yearly column is the savings bucket times 12.
Compared with 50/30/20 at the same income, 60/20/20 saves the same dollar amount but leaves $500 less a month for wants on a $5,000 income, since that $500 moves to needs instead. It is worth switching to when your fixed costs, not your discretionary spending, are what is making the classic split unworkable.
Some versions of the rule add a fourth bucket for giving, or for a specific goal such as a down payment, a vacation fund or extra debt payoff. The 40/30/20/10 split is a common example: 40% for needs, 30% for wants, 20% for savings and 10% for giving or other goals. On $5,000 a month, that is $2,000, $1,500, $1,000 and $500, so you save $12,000 a year and put another $6,000 toward your fourth bucket. It only works if needs fit within 40% of income, so it suits people with low fixed costs. Use the optional fourth field above for it, or for any split that needs one more category. The percentages must still add up to 100%.
Here is the 40/30/20/10 split at a few common incomes, with the fourth bucket's yearly total alongside the savings bucket's:
Because needs are capped at 40%, this split is hardest to hit in expensive housing markets. If your rent or mortgage alone pushes past 40% of take-home pay, try 50/30/20 or 60/20/20 instead, or keep the fourth bucket but lower its percentage rather than forcing needs down to 40%.
These are the monthly amounts for the classic split. The yearly figure is the savings bucket times 12.
At lower incomes the 50% needs limit is often the hardest part. If your rent alone is close to that number, it is a sign to test a 60/20/20 split or to look at where the biggest fixed costs can come down.
The savings bucket is where the rule changes your finances, so it helps to decide what it is for. A common order is:
Eating out is one of the easiest categories to overspend, and tips add up; the tip calculator shows the real cost of a meal before you pay. To turn your savings slice into a target, use the savings goal calculator.
What is the 50/30/20 rule?
It's a simple budgeting framework that suggests spending roughly 50% of your after-tax income on needs, 30% on wants, and putting 20% toward savings and paying down debt beyond the minimums. It's meant as a starting guideline, not a strict requirement.
What counts as a "need" versus a "want"?
Needs are typically costs you can't reasonably avoid: rent or mortgage, groceries, utilities, minimum debt payments, insurance, and basic transportation. Wants cover discretionary spending like dining out, entertainment, subscriptions, and shopping beyond the basics. The line isn't always exact, and it depends on your circumstances.
What if my percentages don't add up to 100%?
The calculator will still work and show you the dollar amount for whatever percentages you enter, and it will warn you about the total. If they don't sum to 100%, some money would be unaccounted for, or you'd be planning to spend more than you earn.
Should this be based on gross or net income?
The 50/30/20 rule is generally applied to your net (take-home, after-tax) income, since that's the money actually available to spend or save. Use our Salary Calculator first if you only know your gross salary.
What if 50% for needs isn't realistic where I live?
In high cost-of-living areas, needs can easily exceed 50% of income, especially with expensive rent. In that case, treat 50/30/20 as a rough target rather than a hard rule. You might run something closer to 60/20/20 and prioritize the savings percentage where you can.
Does debt repayment count as a "need" or "savings"?
Minimum required debt payments are generally treated as a need, since missing them has real consequences. Extra, above-the-minimum debt payments are usually grouped with the savings category, since they're a discretionary choice to build financial position faster.
What is the 60/20/20 rule?
It is a budgeting split of 60% of take-home pay for needs, 20% for wants and 20% for savings. It is a variation of 50/30/20 for people whose fixed costs take more than half of their income. Choose the 60/20/20 preset, or type your own percentages in the Needs, Wants and Savings fields.
What is the 40/30/20/10 rule?
It is a four-bucket version: 40% for needs, 30% for wants, 20% for savings and 10% for giving or a specific goal. Use the 40/30/20/10 preset, or the optional fourth field, to try it on your income. It requires needs to stay at or under 40% of take-home pay, which is easier with low housing costs.
How does this compare to other budgeting methods?
Other popular approaches include zero-based budgeting (every dollar assigned a job) and envelope budgeting (cash or virtual "envelopes" per category). The 50/30/20 rule is popular because it's simple, with three categories instead of a dozen, which makes it a good starting point before moving to something more detailed if needed.