How this calculator works
The 50/30/20 rule is a budgeting shortcut popularised by Elizabeth Warren and Amelia Warren Tyagi in their 2005 book All Your Worth. It works from take-home pay, the amount that actually reaches your bank account after income tax, payroll deductions and pension contributions. Half goes to necessities: housing, utilities, groceries, basic transport, insurance and minimum debt payments. Thirty percent goes to wants: dining out, subscriptions, travel, hobbies and upgrades. The final twenty percent goes to savings and to paying down debt faster than the minimum. The split is a starting point, not a rule of law. A household in an expensive city may need more than half for shelter, and a household paying off a high-interest card may reasonably push the savings share higher. This calculator returns the three target amounts in the same units as the figure you enter. It does not track actual spending or tell you whether your current spending fits, and it does not handle irregular income such as commissions or seasonal work.
Formula
Necessities = 0.50 x after-tax income. Wants = 0.30 x after-tax income. Savings and debt repayment = 0.20 x after-tax income. In the reverse modes, income = necessities / 0.50, wants / 0.30 or savings / 0.20, and the other two amounts follow from the income. The three shares always add to 1.
Worked example
On $4,000 of monthly take-home pay, the targets are $2,000 for necessities, $1,200 for wants and $800 for savings. If you know you spend $2,500 on necessities, the implied income is $2,500 / 0.50 = $5,000, with $1,500 for wants and $1,000 for savings. If you can save $600 a month, the implied income is $600 / 0.20 = $3,000, with $1,500 for necessities and $900 for wants.
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Frequently asked questions
Should I use gross pay or take-home pay?
Take-home pay. The rule already assumes income tax and other payroll deductions have been paid, so applying it to gross pay overstates every target. Use the amount that lands in your account in a typical month.
Are minimum debt payments a necessity or a want?
Minimum payments belong in necessities because they are contractual and unavoidable. Extra payments above the minimum belong in the 20% savings-and-debt bucket, where they compete with saving.
Does the rule work for a variable income?
Only as an average. Use a low, typical month and treat windfalls separately: a common approach is to budget from the lowest reliable monthly income and send most of any extra to savings.
What if my rent alone is more than 50% of take-home pay?
Then the split does not fit your situation and should not be forced. Reduce the wants share first, and consider whether the housing cost itself is affordable relative to income. A budget that cannot be met is not useful.
Is 20% savings enough for retirement?
It depends on your age, income and planned retirement date. Twenty percent is a strong general target. A dedicated retirement projection can tell you whether it is enough for the age you have in mind.