Home » Blog » THE 50/30/20 BUDGET RULE

THE 50/30/20 BUDGET RULE

THE 50/30/20 BUDGET RULE

         The 50/30/20 rule of thumb divides your budget into three categories: needs, wants, and financial objectives. It’s not a hard-and-fast rule, but rather a general guideline to help you create a healthy financial plan.

50% to Needs

Needs are what you can’t live without, or at least not very easily. They include things like:

  • Rents
  • Groceries
  • Utilities, such as electricity, water, and sewer service

30% to Wants

Wants are what you desire but don’t actually need in order to survive. They might include:

  • Hobbies
  • Vacations
  • Dining out
  • Digital and streaming services like Netflix and Hulu

20% to Financial Goals

This category covers two main areas:
  • All savings, such as retirement contributions, saving for a house, and
  • setting money aside in a 529 college savings plan (note that contributions to a 401(k) come from your pre-tax income)
    • Debt payments
Shopping Cart