50/30/20 rule
A simple budget that splits take-home pay into 50% for needs, 30% for wants and 20% for savings and extra debt payments.
The 50/30/20 rule is a starting point for a budget. Needs are bills you must pay, like rent, groceries, utilities, insurance and minimum debt payments. Wants are things you choose, like dining out, streaming and travel. The last 20% goes to savings and paying debt down faster.
The split uses take-home pay, not your salary before taxes. If your rent alone takes more than half of your pay, the rule can feel out of reach. Treat the numbers as a target to adjust, not a test you pass or fail.
Example
With $4,000 a month in take-home pay: $4,000 × 50% = $2,000 for needs, $4,000 × 30% = $1,200 for wants and $4,000 × 20% = $800 for savings and debt.