What is the 50/30/20 Rule?
The 50/30/20 rule is a simple and intuitive method to organize your personal finances and ensure you cover all important aspects of your economic life.
Split your net income (after tax) into three main categories to maintain a healthy balance between obligations, personal enjoyment, and future security.
50% NEEDS
Basic survival expenses and contractual obligations: housing, utilities, groceries, transport, and insurance.
30% WANTS
Non-essentials that improve your quality of life: dining out, movies, hobbies, streaming subscriptions, and vacations.
20% SAVINGS & DEBT
Dedicated to building wealth or reducing liabilities: emergency fund, retirement savings, investments, or extra debt payments.