The 50/30/20 budgeting rule
The 50/30/20 rule is a very simple method to organise your money: you split what you earn each month into three big parts.
The three parts
- 50% for needs: housing, food, utilities, transport, insurance and minimum debt payments.
- 30% for wants: leisure, restaurants, travel, subscriptions, purchases that are not essential.
- 20% for saving and investing: emergency fund, saving for goals and extra debt payments.
It is applied to your net pay, that is, what you actually receive after taxes.
An example
If you take home €1,800 a month:
- €900 for needs.
- €540 for wants.
- €360 for saving and investing.
How to start
- Write down everything you spend for a month.
- Classify each expense as a need or a want.
- Compare your real split with 50/30/20.
- Adjust gradually, starting with saving: move it to another account right after payday.
If the numbers do not work
The rule is a guide, not a law. If you live somewhere with expensive housing, your needs may go above 50%. You can adapt it, for example to 60/20/20, or start with a smaller saving, even 5%, and raise it over time.
How much your savings grow
With the savings calculator you can see how much you would have in a few years by saving a fixed amount every month. And if you do not have a cushion yet, start with the emergency fund.
Split your net pay into 50% needs, 30% wants and 20% savings, and adapt it to your situation.
Informational and educational content. Not financial advice.