The 50/30/20 rule
I wanted a budget that I could remember without an app. Three numbers. That’s it.
The 50/30/20 rule splits your take-home pay into three groups:
| Share | Goes to | Examples |
|---|---|---|
| 50% | Needs | Rent, bills, food, transport to work, minimum debt repayments |
| 30% | Wants | Eating out, entertainment, shopping, holidays |
| 20% | Savings and extra debt payments | Emergency fund, investing, paying off debt faster |
It works because it’s simple. You don’t need to plan every purchase, just keep each group inside its share.
An example
If your take-home pay is $3,000£2,200€2,400₦400,000$3,000 a month:
- Needs (50%): $1,500£1,100€1,200₦200,000$1,500
- Wants (30%): $900£660€720₦120,000$900
- Savings (20%): $600£440€480₦80,000$600
When your needs cost more than half
In many cities, rent alone can take half your pay. If your needs really are more than 50%, that doesn’t mean budgeting won’t work. It means you adjust the split:
- 60/20/20: needs take more, wants take less, savings stay the same.
- 70/20/10: for tight months or expensive cities. Savings drop, but don’t disappear.
The rule is a starting point, not a law. What matters is that every group has a number, and savings never drop to zero.
My rent was 45% of my pay on its own. So I went 60/25/15 for a year, while I worked on growing my income. Then I moved it back towards 50/30/20.
Needs vs wants, again
The 50/30/20 rule only works if you’re honest about what counts as a need. Remember the test from Level 1: if you didn’t buy this, what would actually happen? A basic phone plan is a need. The newest phone on an expensive contract is mostly a want.
