50/30/20 budget calculator
Half of take-home pay to needs, 30% to wants, 20% to savings. Add a second income and it also splits the shared costs fairly by income.
How it works
The rule, from Elizabeth Warren and Amelia Warren Tyagi's All Your Worth (2005), applies to take-home pay after tax. Needs are what you would still owe if you lost your job next month; savings includes debt repayment above the minimums.
With two incomes, needs and savings are shared and split in proportion to income, and each partner keeps 30% of their own pay for wants. Leave the second field empty for one income.
When it does not fit
Where housing alone takes most of the needs bucket, change the numbers and keep the shape: 60/20/20 or 70/20/10 are honest variants. The useful step is comparing these targets with three months of real statements.
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Questions
Is the 50/30/20 rule based on gross or net income?
Do minimum debt payments count as needs?
Should couples split costs by income or half and half?
Sources
- Warren E., Warren Tyagi A. (2005). All Your Worth: The Ultimate Lifetime Money Plan. Simon & Schuster. https://www.simonandschuster.com/books/All-Your-Worth/Elizabeth-Warren/9780743269889
- CNBC (2019). Elizabeth Warren is a personal finance expert, and she has a plan for your budget. https://www.cnbc.com/2019/06/27/elizabeth-warren-has-a-plan-for-your-budget.html