The 50/30/20 Budget Explained (With a Simple Template)

Use the 50/30/20 method to organize your money fast, reduce stress, and keep room for fun.

What is the 50/30/20 rule?

• It’s a simple framework: 50% needs, 30% wants, 20% saving and debt payoff.
• The goal is direction, not perfection—your real percentages can shift based on income and cost of living.

Step 1: Define ‘needs’ vs ‘wants’

• Needs: housing, utilities, basic groceries, insurance, minimum debt payments.
• Wants: dining out, streaming, upgrades, non‑essential shopping, travel.

Step 2: Set your baseline numbers

• Start with your monthly take‑home pay.
• Multiply by 0.50, 0.30, and 0.20 to get target amounts.

Step 3: Fix the biggest line item first

• If you’re over 50% on needs, focus on housing/transportation wins (roommate, refinance, insurance shopping).
• If your wants are high, reduce subscriptions and add a 24‑hour rule for online purchases.

A simple template

• Create three categories in a notes app or spreadsheet: Needs, Wants, Future.
• Track weekly for one month, then adjust. Progress beats perfection.

Next step

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Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice.