Budget Planner
Analyze your monthly spending with the 50/30/20 rule and find where your money goes.
Monthly Take-Home Income
50%Needs (Essential)
Housing, food, insurance, transportation, minimum payments
30%Wants (Lifestyle)
Dining out, entertainment, shopping, subscriptions
20%Savings & Debt
Retirement, emergency fund, investments, extra debt payments
Monthly Deficit
-$380
Savings rate: 24% · Total expenses: $5,380
50/30/20 Analysis
Top Expenses
Budget Alerts
- Needs spending is 64.6% of income (target: 50%). Consider reducing fixed costs.
- You're spending $380 more than you earn. This is unsustainable.
About the 50/30/20 Rule
Popularized by Senator Elizabeth Warren, the 50/30/20 rule suggests: 50% of after-tax income on needs, 30% on wants, and 20% on savings/debt. It's a guideline — high-cost-of-living areas may require adjusting the needs percentage upward.
The 50/30/20 Budget Rule Explained
The 50/30/20 rule divides your after-tax income into three categories: 50% for needs (housing, food, insurance, minimum debt payments), 30% for wants (dining out, entertainment, shopping), and 20% for savings and extra debt repayment. Popularized by Senator Elizabeth Warren in her book "All Your Worth," it provides a simple framework that works for most income levels.
What Counts as Needs vs Wants?
| Needs (50%) | Wants (30%) | Savings (20%) |
|---|---|---|
| Rent / Mortgage | Dining out | 401(k) / IRA |
| Groceries | Entertainment | Emergency fund |
| Utilities | Shopping | Extra debt payments |
| Health insurance | Subscriptions | Investments |
| Car payment / transit | Travel | Savings goals |
| Minimum debt payments | Gym / hobbies |
Budget by Income Level
The 50/30/20 breakdown looks different at every income level:
| Take-Home | Needs (50%) | Wants (30%) | Savings (20%) |
|---|---|---|---|
| $3,000/mo | $1,500 | $900 | $600 |
| $5,000/mo | $2,500 | $1,500 | $1,000 |
| $7,000/mo | $3,500 | $2,100 | $1,400 |
| $10,000/mo | $5,000 | $3,000 | $2,000 |
When 50/30/20 Doesn't Work
In high-cost-of-living areas, housing alone may consume 40%+ of income, making the 50% needs target unrealistic. In that case, adjust to 60/20/20 or 70/15/15 while working to reduce fixed costs (downsize, refinance, negotiate rent). The key principle is that savings should never drop below 10% unless you are in a financial emergency.
Zero-Based Budgeting Alternative
If 50/30/20 feels too loose, try zero-based budgeting: assign every dollar of income to a specific category until you reach $0 remaining. This forces intentional decisions about every expense. Apps like YNAB (You Need A Budget) use this approach. The discipline is higher, but so is the financial awareness.
CFPB — Financial Planning Resources→Frequently Asked Questions
What if I can't save 20%?
Start wherever you can — even 5% is better than nothing. Automate your savings on payday so it happens before you spend. As you reduce expenses or earn more, gradually increase your savings rate. The average American savings rate is around 4-5%, so any improvement above that puts you ahead.
Should I budget based on gross or net income?
Always budget from net (after-tax) income — the money that actually hits your bank account. If your 401(k) contribution comes out pre-tax, count it as part of your 20% savings even though it never appears in your paycheck.
How much should rent be?
The traditional guideline is no more than 30% of gross income (or about 35-40% of net income). In expensive cities, many people spend 40-50%, but this crowds out savings and flexibility. If possible, keep housing under 30% of net income.
Calculate your actual take-home pay with our Paycheck Calculator or build your emergency fund with the Emergency Fund Calculator.