The 50/30/20 Budget

By Katherine Lordi - Try this simple budgeting framework.

What is the 50/30/20 Rule?

This rule divides your income into three broad categories: 50% necessities, 30% wants, and 20% savings, investments, and debt repayment. Here’s a closer look at each.

Let’s Break it Down: 50% Needs

Needs are expenses you cannot avoid. What are the needs in your life? Examples include:

- Groceries

- Housing

- Transportation

- Insurance

30% Wants

On the other hand, wants are goods and services you desire that are not essential and are often for fun! Examples include:

- Going out to a restaurant

- Going to a concert

- Traveling

20% Savings, or Debt Repayment

Remember to pay yourself first by putting AT LEAST 20% of your income towards savings, investments, and paying off debt in order to prepare for future wants and needs!

Why Use the 50/30/20 Rule?

It is simple.

It helps ensure that you pay yourself first.

It helps you be smarter and more successful with your money.

What's Next On Budgeting?

Next Story: The Envelope System

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