How the 50/30/20 budget works
The 50/30/20 rule splits your monthly take-home pay into three buckets:
- 50% needs: things you must pay to live and work, such as rent or mortgage, groceries, utilities, transport, insurance and minimum loan payments.
- 30% wants: things you enjoy but could cut, such as eating out, shopping, subscriptions, hobbies and holidays.
- 20% savings and debt: your emergency fund, retirement and investments, and anything you pay off above the minimum.
Each bucket = monthly income after tax × its percentage
A worked example
These are the numbers already in the calculator above:
| Bucket | Share | Amount |
|---|---|---|
| Monthly income after tax | 100% | 3,000 |
| Needs | 50% | 1,500 |
| Wants | 30% | 900 |
| Savings and debt | 20% | 600 |
Saving 600 a month adds up to 7,200 a year, before any interest.
When to change the split
50/30/20 is a starting point, not a rule you have to follow. If rent is high where you live, 60/20/20 may be more realistic. If you are paying off debt fast, try 50/20/30 and put the extra 10% towards the debt. Type your own percentages into the calculator; it warns you if they don't add up to 100%.
Turn the split into a plan
Knowing your numbers is step one. The 2027 Budget Planner gives you 12 monthly budget pages, expense, bill and savings trackers, plus a spreadsheet that adds everything up for you.
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