The 50-30-20 budgeting method is a simple approach to manage personal finances by dividing income into three main categories:
50% for Needs: Half of your income goes towards necessities like rent, groceries, utilities, and transportation.
30% for Wants: Set aside 30% for non-essentials like dining out, entertainment, or hobbies.
20% for Savings and Debt Repayment: Allocate the remaining 20% to savings, investments, or paying down debt.
50-30-20 budgeting calculation
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Breaking Down the 50-30-20 Budget: How to Divide Your Income Between Needs, Wants, and Savings
Needs
Housing (rent or mortgage)
Utilities (electricity, water, etc.)
Food (groceries)
Health insurance
Transportation (gas, car payment, or public transit)
Wants
Entertainment (movies, concerts, streaming services)
Dining out or takeout
Hobbies and recreational activities
Vacation and travel expenses
Gym memberships or fitness classes
Subscriptions (magazines, apps, beauty boxes)
Upgraded home decor or gadgets
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