A simple, proven budget: 50% of take-home pay to needs, 30% to wants, and 20% to saving and extra debt payoff. See your targets in dollars.
The 50/30/20 budget is a simple way to divide your take-home pay: about 50% to needs, 30% to wants, and 20% to saving and extra debt payoff. Enter your monthly pay to see each target in dollars and a realistic yearly savings goal.
Needs are the essentials you cannot skip: housing, utilities, groceries, insurance, minimum debt payments, and transportation to work. Wants are the lifestyle choices: dining out, streaming, travel, and hobbies. The final 20% builds your future through emergency savings, retirement contributions, and paying debt down faster than the minimum.
The percentages are a starting point, not a rule. In high-cost cities, needs often run above 50%, which means trimming wants or lifting income to keep saving. The one share worth protecting is the 20%: paying yourself first, before wants, is what turns a budget into progress over time.
Use take-home pay, the amount that lands in your account after taxes and payroll deductions. The 50/30/20 split is built around what you actually receive.
That is common in expensive areas. Cover the needs first, then split what remains between wants and savings, protecting savings as much as you can.
Payments above the minimum count toward the 20% savings-and-debt bucket, since paying down debt builds net worth just like saving does.
See the exact formula and a worked example on our methodology page.