1079 - What Is The 50/30/20 Budget Rule? by Ashley Friedman

If you’re not into traditional budgeting, where you place all of your spending into rigid categories, then the 50/30/20 budget rule might be for you.

This financial management budgeting method is broken into three main categories: 50% needs, 30% wants, and 20% savings and investing. It’s designed to take a full picture of one’s monthly living expenses in the simplest way possible and remove the nitty gritty details that can bog someone’s bank account down with complications.

So, in theory, if your after-tax income is $5,000 a month, $2,500 should go to your needs, $1,500 to your wants, and $1,000 to your savings and investing goals. Let’s talk more about how this all works.

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