50/30/20 budget calculator

What is the 50/30/20 rule?

A simple budget from Elizabeth Warren and Amelia Warren Tyagi’s book All Your Worth (2005): 50% of after-tax income for needs, 30% for wants and 20% for savings and paying down debt. On $5,000 a month, that is $2,500, $1,500 and $1,000.

Is it based on gross or take-home pay?

Take-home pay — what you bring home after taxes and other deductions, as the CFPB’s budgeting guide describes it.

What counts as needs?

Things you must pay: rent or mortgage, groceries, utilities, transportation, insurance, child care and minimum payments on debts.

What goes in the 20%?

Emergency savings, retirement, saving for education, and paying debt down faster than the minimum.

What if my needs are more than 50%?

Then the split cannot be followed exactly. Enter what you spend now to see your own percentages, then decide where to adjust.

Is 50/30/20 the same as the CFPB’s 50/20/30 rule?

Yes, it is the same split in a different order. The CFPB worksheet “My spending rule to live by” puts 50 percent of take-home pay toward needs, 20 percent toward savings and debt payments, and no more than 30 percent toward wants. The worksheet also says a rule of thumb can be hard to apply to your own situation and invites you to set a personal rule instead.

How do I compare my own spending with the rule?

Track what you spend for a month, sort it into needs, wants and savings, and type the totals into the “now” boxes. If $3,100 goes to needs, $1,200 to wants and $700 to savings out of $5,000, the shares are 62%, 24% and 14%: needs run $600 over the 50% line, which is where the plan has to change.

How the split is calculated

The calculator multiplies your take-home pay by 0.50, 0.30 and 0.20. A yearly figure is divided by 12 first, so the answer is always per month. Nothing else is assumed: the rule does not know your rent, your debts or your goals, which is why the CFPB treats it as one common rule of thumb and not a requirement.

Worked example: $5,000 a month

$5,000 × 0.50 = $2,500 for needs, × 0.30 = $1,500 for wants and × 0.20 = $1,000 for savings and extra debt payments. Entered as $60,000 a year instead, the calculator divides by 12 and returns the same monthly figures; per year they are $30,000, $18,000 and $12,000. Compared with the spending in the last question, needs would have to fall by $600, savings at $700 sit $300 below the $1,000 target, and wants at $1,200 are under their $1,500 limit.

Common mistakes

Starting from gross pay inflates every bucket; the CFPB’s budgeting material uses net income, the amount actually received after deductions. Counting a payment twice is the second slip: the CFPB worksheet groups credit card payments with savings and debts, while this page treats minimum payments as needs and extra payments as savings, so choose one treatment and keep to it. Skipping the tracking step makes the “now” numbers guesses; the CFPB advises tracking spending for a week or a month and comparing it with the budget regularly. And a split that fits one household can fail in a high-cost area, where needs may exceed half of pay, so use the result as a starting point.

Sources: Elizabeth Warren and Amelia Warren Tyagi, All Your Worth (2005), the origin of the 50/30/20 split; CFPB, My spending rule to live by (the 50/20/30 version, with the groups it counts as needs and as savings and debts), Consumer tips for managing spending (track spending, compare it with the budget) and the Building Blocks teacher guide Analyzing budgets (budget from net income). See also the savings goal calculator, the net worth calculator and the rent affordability calculator.

Estimates for planning only — not financial advice. Your lender's figures decide. How we check our calculators.