Budget Calculator

What the 50/30/20 rule is

Popularised by Elizabeth Warren, the 50/30/20 rule splits after-tax income three ways: 50% to needs, 30% to wants and 20% to savings or debt repayment. Its value is not precision but the fact that it gives you a starting structure in about ten seconds — and a budget you actually begin is worth more than a perfect one you never build.

The formula behind it

Each share is simply income × 0.50, × 0.30 and × 0.20. On 3,000 a month that is 1,500 for needs, 900 for wants and 600 for saving. Needs are the things that continue whether or not you want them — housing, utilities, groceries, transport, insurance, minimum debt payments. Wants are everything discretionary. Savings covers investments, an emergency fund and any debt repayment above the minimum.

How to use this calculator

Enter your monthly income after tax and press Calculate to see the three amounts. Then compare each against what you actually spent last month — the gap between the two is the real output of this exercise, not the numbers themselves.

Adapting it to reality

In expensive cities, housing alone can consume most of the 50%, and the honest response is to reduce the wants share rather than pretend the rule is being met. If you carry high-interest debt, invert the priority: clearing a card at 20% beats saving at 4% by a wide margin. And if 20% is comfortable, raise it — the rule is a floor for saving, not a ceiling.