How To Use The 50/30/20 Budget Rule Calculator
The 50/30/20 rule splits after-tax income into three buckets and nothing else. It is popular because it needs no categories, no spreadsheet and no tracking of individual purchases.
Savings budget
$800.00
- Actual savings rate
- 10.00%
- Needs budget
- $2,000.00
- Wants budget
- $1,200.00
- Savings actually left
- $400.00
- Needs variance
- $100.00
- Wants variance
- $300.00
Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.
The formula this calculator uses
bucket amount = take-home pay x bucket percentage
- I
- Monthly take-home pay, after tax
- n
- Share of income going to needs
- w
- Share of income going to wants
- s
- Share of income going to savings and debt repayment
How to check the result by hand
- 1
Work out take-home pay, not gross salary
Use the amount that lands in the current account after tax, pension contributions and any other deductions, because that is the money the budget actually has to divide.
- 2
Apply the three percentages
Take-home pay times 50% for needs, times 30% for wants and times 20% for savings. The three results must add back up to the original income.
- 3
Enter what was actually spent
Put the real needs and wants figures from a recent statement into the two actual fields. The savings figure is whatever income is left over, so it never has to be entered.
- 4
Compare actual against target
A positive variance on needs means the bucket was overspent. The savings rate tells you at a glance whether the month met the 20% target.
- 5
Reallocate rather than restart the budget
If needs are over, move the difference from wants before cutting savings. A month at 45% wants and 25% savings is a better outcome than a perfect 50/30/20 with nothing saved.
For worked examples, common mistakes and the limits of this formula, read the full How To Use The 50/30/20 Budget Rule page.