50/30/20 Budget Calculator - NerdWallet (2024)

Use our 50/30/20 budget calculator to estimate how you might divide your monthly income into needs, wants and savings. This will give you a big-picture view of your finances. The most important number is the smallest: the 20% dedicated to savings. Once you achieve that, perhaps with an employer-sponsored retirement plan and other automated monthly savings transfers, the rest — that big 80% chunk — is up for debate.

That leaves 50% for needs and 30% for wants, but these are parameters you can tweak to suit your reality. For example, if you live in an expensive housing market, your monthly mortgage or rent payment might spill a bit into your "wants" budget. Budgets are meant to bend but not be broken.

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50/30/20 Budget Calculator - NerdWallet (1)

50/30/20 budget calculator

Our 50/30/20 calculator divides your take-home income into suggested spending in three categories: 50% of net pay for needs, 30% for wants and 20% for savings and debt repayment.

The 50/30/20 budget

Find out how this budgeting approach applies to your money.

Your 50/30/20 numbers:

Necessities

$0

Wants

$0

Savings and debt repayment

$0

Do you know your “want” categories?

Become a NerdWallet member to track your monthly spending trends, including how much you're allocating to needs and wants.

What is the 50/30/20 rule?

The 50/30/20 rule is a popular budgeting method that splits your monthly income among three main categories. Here's how it breaks down:

Monthly after-tax income

Before you can slice up your 50/30/20 budget, you need to calculate your monthly take-home income. This figure is your income after taxes have been deducted. It's likely you'll have additional payroll deductions for things like health insurance, 401(k) contributions or other automatic payments taken from your salary. Don't subtract those from your gross (before tax) income. If you've lumped them in with your taxes, you'll want to separate them out — subtract only taxes from your gross income.

50% of your income: needs

Necessities are the expenses you can’t avoid. This portion of your budget should cover required costs such as:

  • Housing.

  • Food.

  • Transportation.

  • Basic utilities.

  • Insurance.

  • Minimum loan payments. Anything beyond the minimum goes into the savings and debt repayment bucket.

  • Child care or other expenses that need to be covered so you can work.

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50/30/20 Budget Calculator - NerdWallet (2)

30% of your income: wants

Distinguishing between needs and wants isn’t always easy and can vary from one budget to another. Generally, though, wants are the extras that aren’t essential to living and working. They’re often for fun and may include:

  • Monthly subscriptions.

  • Travel.

  • Entertainment.

  • Meals out.

20% of your income: savings and debt

Savings is the amount you sock away to prepare for the future. Devote this chunk of your budget to paying down existing debt and creating a financial cushion.

How, exactly, to use this part of your budget depends on your situation, but it will likely include:

  • Starting and growing an emergency fund.

  • Saving for retirement through a 401(k) and perhaps an individual retirement account.

  • Paying off debt, beginning with high-interest accounts like credit cards.

50/30/20 Budget Calculator - NerdWallet (3)

Still have questions? Ask a Nerd directly

Simply send us your questions, and our dedicated in-house Nerds will provide you with thoughtful responses within 2 business days.

50/30/20 Budget Calculator - NerdWallet (4)

Get more help with monthly budget planning

For more budgeting advice, including how to prioritize your savings and debt repayment, review our tips for how to build a budget and utilize our financial calculators. Then, consult our personal finance guide.

Not sure how to start budgeting? Downloading a budget app or personal finance software may help, or get informed with a budgeting book.

Or become a NerdWallet member for free. We’ll track your spending in one place and identify areas where you can save. Compare NerdWallet vs. Mint, and learn how our app uses the 50/30/20 budget.

50/30/20 Budget Calculator - NerdWallet (5)

50/30/20 Budget Calculator - NerdWallet (2024)

FAQs

Is the 50/30/20 rule realistic? ›

The 50/30/20 rule can be a good budgeting method for some, but it may not work for your unique monthly expenses. Depending on your income and where you live, earmarking 50% of your income for your needs may not be enough.

What is the best way to budget 50 30 20? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

What is one negative thing about the 50 30 20 rule of budgeting? ›

Depending on your income and expenses, the 50/30/20 rule may not be realistic for your individual financial situation. You may need to allocate a higher percentage to necessities or a lower percentage to wants in order to make ends meet. It doesn't account for irregular expenses.

Should I do a zero based budget or 50 30 20? ›

The 50/30/20 rule is a budgeting strategy that divides your income into three buckets: 50% for needs, 30% for wants and 20% for savings and debt payoff. What Is a Zero-Based Budget? A zero-based budget has you give every dollar you earn a job so that no money is left unaccounted for.

Why the 50 30 20 rule is unrealistic? ›

Some Experts Say the 50/30/20 Is Not a Good Rule at All. “This budget is restrictive and does not take into consideration your values, lifestyle and money goals. For example, 50% for needs is not enough for those in high-cost-of-living areas.

What are the flaws of the 50 30 20 rule? ›

Drawbacks of the 50/30/20 rule: Lacks detail. May not help individuals isolate specific areas of overspending. Doesn't fit everyone's needs, particularly those with aggressive savings or debt-repayment goals.

How much should I budget for a 60k salary? ›

On a $60,000 salary, which roughly translates to $50,000 after taxes (depending on your location and tax rates), 60% would be about $30,000 per year, or $2,500 per month. Savings (20%): This portion should be allocated towards your savings, investments, emergency funds, or debt repayment.

What is the alternative to 50 30 20? ›

Alternatives to the 50/30/20 budget method

For example, like the 50/30/20 rule, the 70/20/10 rule also divides your after-tax income into three categories but differently: 70% for monthly spending (including necessities), 20% for savings and for 10% donations and debt repayment above the minimums.

Is $1000 a month after bills good? ›

Bottom Line. Living on $1,000 per month is a challenge. From the high costs of housing, transportation and food, plus trying to keep your bills to a minimum, it would be difficult for anyone living alone to make this work. But with some creativity, roommates and strategy, you might be able to pull it off.

How much does Dave Ramsey say to save? ›

According to the Ramsey Solutions post, the recommendation is to invest 15% of your household income for retirement. The article uses the example of a household income which is $80,000 annually. Based on these earnings, each year you need to invest $12,000 towards your retirement savings.

What are three disadvantages of using the 50/30/20 budget? ›

Cons
  • Risk of overspending. Allocating 30% of your income for nonessential wants is a large amount of money --especially compared to allocating only 20% toward savings. Don't blow your cash on things that aren't important. ...
  • Not rigid. People often struggle to manage their money because they lack a financial plan.
Jul 27, 2023

What is the #1 rule of budgeting? ›

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

What are two cons of a zero-based budget? ›

Zero-based budgeting differs from traditional budgeting in that the companies using it create a budget for each new period. The benefits can include lower costs by keeping old and new expenses in check. Potential disadvantages are that it can reward short-term thinking and be resource-intensive.

Is the 30 rule outdated? ›

The 30% Rule Is Outdated

To start, averages, by definition, do not take into account the huge variations in what individuals do. Second, the financial obligations of today are vastly different than they were when the 30% rule was created.

Is saving 20% of income realistic? ›

The 20% rule is a good general guide, but it isn't the right fit for everyone. Some people can save above that rate, while others merely struggle to make ends meet. “Some people pay their rent and they have nothing left.

Is the 30% rule outdated? ›

The 30% Rule Is Outdated

To start, averages, by definition, do not take into account the huge variations in what individuals do. Second, the financial obligations of today are vastly different than they were when the 30% rule was created.

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