The 50/30/20 rule: how to split your income (with a calculator)

The 50/30/20 rule splits your take-home pay into three parts: 50% for needs, 30% for wants and 20% for savings and paying down debt. If €3,000 a month lands in your account, that's €1,500 for needs, €900 for wants and €600 for savings. It's a starting point for a budget, not a law, and the most useful part is seeing how far your real spending is from it.

The split was popularised by Elizabeth Warren and Amelia Warren Tyagi in their 2005 book All Your Worth. It has stuck around because it's easy to remember and doesn't ask you to track forty categories.

What goes in each bucket

Needs (50%)

Costs you'd still have to pay if you lost your job tomorrow:

• Rent or mortgage, and home insurance
• Electricity, heating, water and internet
• Groceries (not restaurants or takeaway)
• Getting to work: travel pass, fuel, car insurance
• Childcare and other insurance
• A basic phone plan
• Minimum payments on loans and cards

Wants (30%)

Things that make life better but could be paused in a bad month:

• Eating out, takeaway and coffees
• Streaming, gaming and app subscriptions
• Clothes beyond the basics, hobbies and gadgets
• Holidays and weekends away
• Upgrades on needs, like the premium phone plan or a bigger car than you need

Savings and debt (20%)

• Your emergency fund
• Pension contributions you make yourself
• Investments, such as index funds
• Saving for a goal, like a deposit or a car
• Extra payments on debt, above the minimum

How to set it up, step by step

1. Find your take-home pay. Use what arrives in your account each month after tax. If your income varies, take the average of the last six months.
2. Pull last month's spending. Your banking app's transaction list is enough. You don't need to go further back yet.
3. Label each line need, want or savings. Be honest with the grey areas. The gym is a want for most people, even if it feels like a need.
4. Add up the three totals and put them into the calculator above to see your percentages.
5. Pick one change. If wants are over 30%, choose the category that surprised you most and set a limit for next month. If needs are over 50%, look for one bill you can renegotiate or switch.
6. Move the 20% on payday. Set up an automatic transfer to a savings account for the day your salary arrives. Saving what's left at the end of the month rarely works, because there's rarely anything left.

When 50/30/20 doesn't fit

In many cities rent alone takes 40% of a single income, and the numbers won't line up. That doesn't mean the idea is useless. Adjust the split and keep the order: needs first, savings second, wants with what's left.

• 60/20/20 if housing is expensive but you still want to save properly.
• 70/20/10: 70% for all living costs, 20% for savings and 10% for extra debt payments. Useful while you're clearing a loan or a card.
• 50/20/30 if you're building an emergency fund or clearing a credit card and can cut back on wants for a while.

If your income changes from month to month, apply the split to a steady salary rather than to each payment. Our guide to budgeting on an irregular income shows how to set that up.

Common mistakes

• Using gross salary. Tax isn't part of the split. Start from what you actually receive.
• Calling every subscription a need. Internet is a need. Three streaming services aren't. Our subscription check helps you sort them.
• Putting minimum debt payments in the 20%. Only the extra you pay counts as savings.
• Giving up because needs are at 60%. Knowing that is useful. It tells you where the pressure is.

Do it in mooves

1. On Budget, add your monthly take-home income.
2. Open each expense category and mark it Need or Want in the category editor.
3. Put savings transfers and extra debt payments in the Savings and Debt sections.
4. Open Your numbers to see your own split next to the 50/30/20 guideline, month by month.

Try it free