50-30-20 Budgeting Rule Cheat Sheet
How to Break It Down
50% – Needs
Spend no more than half of your take-home pay on essentials:
- Rent or mortgage
- Groceries
- Utilities
- Insurance
- Transportation
- Minimum debt payments
30% – Wants
This is your fun money:
- Dining out
- Streaming services
- Hobbies and entertainment
- Travel and shopping
20% – Savings & Debt Repayment
Use this for:
- Emergency fund
- Retirement accounts (401k, IRA)
- Extra loan payments
- Long-term savings goals
How to Start
- Track your monthly income after taxes.
- Categorize your current spending into needs, wants, and savings.
- Adjust until your budget aligns with the 50-30-20 ratio.
When to Adjust the Rule
Real life isn’t one-size-fits-all. Here's how to tweak it:
- High debt? Shift more into the 20% savings/debt category.
- Low fixed costs? You can enjoy a bit more flexibility in the “wants” section.
- Irregular income? Base percentages on an average monthly income and set up a buffer.
##Example: Monthly Income = $4,000
| Category | Amount | Examples |
|---|---|---|
| 50% Needs | $2,000 | Rent, groceries, car insurance |
| 30% Wants | $1,200 | Hobbies, takeout, Netflix |
| 20% Savings/Debt | $800 | Student loans, 401(k), emergency fund |