The 50/30/20 rule is a simple starting point: split your take-home pay into needs, wants and savings. It’s not perfect for every situation, but it gives you a structure fast.
| Category | Share | Examples |
|---|---|---|
| Needs | 50% | Rent, utilities, groceries, insurance, transport, minimum debt payments |
| Wants | 30% | Eating out, travel, streaming, shopping |
| Savings & debt | 20% | Emergency fund, retirement, extra debt payments, money sent home |
An example
Say your take-home pay is $4,000 a month. Needs get $2,000, wants $1,200 and savings $800. If rent alone is $1,800, your needs will run over, so trim wants first.
Adapting it
In high-rent cities, a 60/20/20 or even 65/15/20 split is realistic early on. Keep the savings share steady if you can, even if it’s smaller.
Automate it: Set an automatic transfer to savings on payday so it happens before you can spend it.
