Budget (50/30/20): Definition & Example

Budget (50/30/20)

A plan for splitting your income among needs, wants, and savings.

A budget gives every dollar a job. The popular 50/30/20 rule puts 50% of take-home pay toward needs, 30% toward wants, and 20% toward savings and debt payoff. The exact split matters less than having one you will actually follow. The savings slice is where wealth is built.

For example

On $4,000 of monthly take-home pay, 50/30/20 is $2,000 for needs, $1,200 for wants, and $800 to save and invest.

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Budget (50/30/20)

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