What is the 50/30/20 rule in finance?

[deepak]

Hi everyone,
I keep hearing about budgeting using the 50/30/20 rule, but I’m not fully sure how it works in real life. What is the 50/30/20 rule in finance? How do you divide your income into 50%, 30%, and 20%, and what exactly counts as needs vs wants vs savings?

 

[Aurora]

The 50/30/20 rule is a simple budgeting method where you divide your income into:

• 50% for needs (rent, bills, groceries)
• 30% for wants (entertainment, dining, shopping)
• 20% for savings and debt repayment.

 

[Stacy]

The 50/30/20 rule is a simple budgeting method: 50% of income goes to needs, 30% to wants, and 20% to savings or debt repayment. It helps manage money, control expenses, and build long-term financial stability.

 

[rajat]

The 50/30/20 rule is a simple budgeting method that divides your after-tax income into three categories: 50% for needs (rent, utilities, groceries), 30% for wants (entertainment, dining, shopping), and 20% for savings or debt repayment. It helps manage money effectively while maintaining balance between expenses and financial goals.