50/30/20 Rule

June 27, 2023

1 Min Read

The 50/30/20 rule is a simple, practical rule of thumb for individuals who want a budget that's easy and effective. It offers guidelines for enjoying your income while putting savings on autopilot.

Humans are fallible—sometimes we just need guidelines. If you struggle making sense of a sea of budgeting systems and apps, consider the 50/30/20 rule. Developed by Elizabeth Warren, a senior U.S. Senator from Massachusetts and expert in bankruptcy law, the 50/30/20 rule states that your after-tax income should be roughly divided three ways:

50% to needs
30% to wants
20% to long-term savings

The 50/30/20 rule is not gospel and it's not a law. It's simply a guideline. Here's a tool to help you see how much of your monthly income should be used in each category according to the rule:

Tag(s):

Savings

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