Budgeting
Splitting income into buckets
Each bucket is a fixed share of take-home pay. The three shares add to 100%, so the three buckets account for the whole of the income.
The Formula
bucket = take-home pay x bucket percentage
Each bucket is a fixed share of take-home pay. The three shares add to 100%, so the three buckets account for the whole of the income.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| I | Take-home pay | currency | Monthly income after tax and payroll deductions. |
| p_k | Bucket share | percent | The percentage assigned to bucket k. |
| B_k | Bucket amount | currency | How much money bucket k is allowed. |
What Each Symbol Means
Icurrency
Take-home pay
Monthly income after tax and payroll deductions.
p_kpercent
Bucket share
The percentage assigned to bucket k.
B_kcurrency
Bucket amount
How much money bucket k is allowed.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to use the 50/30/20 budget rule page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Use The 50/30/20 Budget Rule, filed under Finance. Every number the guide produces comes from substituting into this one line.