50/30/20 Budget Calculator – Forbes Advisor

Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

The 50/30/20 method of budgeting simplifies how much to allocate to your wants, needs, and savings. Having a fixed percentage for each category takes the guesswork out of how much you should spend.

Enter your monthly after-tax income into this free budget calculator to determine what your 50/30/20 budget would look like.

How to use the 50/30/20 budget calculator

A budget calculator can be a useful tool to help you assess your monthly income and its monthly destination. A 50/30/20 budget calculator, in particular, will divide your income into three different categories: 50% for your needs, 30% for your wants, and 20% for your savings.

To use the 50/30/20 budget calculator, enter your monthly after-tax income. This is the amount you receive each month from paychecks and other sources of income after taxes have been deducted. Usually, after-tax income also reflects deductions for health insurance and any employer-sponsored retirement plans, such as a 401(k).

Once you have entered the after-tax amount, click “Calculate”.

The calculator will divide your after-tax income into three categories based on different attribution percentages. These results indicate how you should spend your money each month according to the 50/30/20 rule.

What is the 50/30/20 budget?

The 50/30/20 budget is a simple budgeting strategy that can help you get started with a budget or get back on track after a setback. It was made popular by then-professor (and now US senator) Elizabeth Warren and her daughter, Amelia Warren Tyagi, in their book All Your Worth: The Ultimate Lifetime Money Plan.

This budgeting method makes budgeting easier by dividing your income into three categories: wants, needs, and savings. Having only three categories to budget for can be much less overwhelming than more detailed budgets.

Compulsory expenses, which are expenses that you “must” pay and cannot avoid, should represent about 50% of your income. These expenses include:

  • Mortgage or rent payments
  • Utilities
  • Health care
  • Basic groceries
  • Transport costs
  • Childcare costs

Discretionary costs, also called “needs”, should represent about 30% of your income. This expense category includes:

  • Dine out
  • Purchases
  • Entertainment
  • Travel and Vacation

Savings and debt payments should represent 20% of your income. This category will cover:

How to make a budget plan

Making a budget plan can seem daunting, but it doesn’t have to be. A budget plan is a useful tool that will give you a better idea of ​​your financial situation. When you see your overall financial picture, it will be easier to create realistic goals throughout your financial journey, like buying a house or saving money for a wedding.

A budget plan strikes the right balance between your income and your expenses.


For most people, income is net pay from employment. But there are other forms of income, including capital gains from investments, passive income from rental properties and other sources, or income from government programs, like Social Security.

If you have multiple streams of income each month, you need to know exactly how much you’re receiving before trying to make a budget plan. If your income varies each month (for example, you may work in the service industry and rely on tips as your primary source of income), you can build a budget plan based on your average monthly income for the past six months. .


Expenses are what you spend your income on. Expenses can vary, but categorizing them into “wants” and “needs” can help you more easily determine where your money is going.

Overspending can be one of the reasons you might find that your budget isn’t working. It can be easy to overindulge on a night out or make an impulse purchase that wasn’t planned. Keep in mind that you don’t have to follow a budget to the last penny; If you end up splurging on a new item, you can find other places to offset the purchase, perhaps by lowering your grocery bill by only buying generic items for the rest of the month.

budget planner

A budget planner is the method you decide to use to manage your money. In this case, the 50/30/20 budget planner allows you to allocate money for debt and savings goals while allocating funds to spend on things you may want but don’t. don’t necessarily need.

How to budget using the 50/30/20 rule

You’ll need to do some math to create a 50/30/20 budget, but luckily it’s not complicated.

To determine how much of your income should be allocated to each category, you need to know exactly how much money you earn. This will be the basis of all your calculations.

For example, let’s say your monthly net salary is $4,000. Applying the 50/30/20 rule would give you a budget of:

  • 50% for mandatory expenses = $2,000 (0.50 X 4000 = $2000)
  • 30% for wants and discretionary expenses = $1,200 (0.30 X 4000 = $1200)
  • 20% for savings and debt repayment = $800 (0.20 X 4000 = $800)

Frequently Asked Questions

How do you budget when you have a low income?

If you earn a low income, you can assume that most budgeting advice is aimed at people earning higher salaries. But the truth is, you can budget even when your dollars are gone each month.

The key to budgeting for money when you have a low income is to sit down and look at your overall finances. You need to assess what you’re spending your money on each month and keep an eye out for areas where you might be overspending. For example, you might find that you spend $15 every month on a subscription service that you don’t use. Be sure to cut unused expenses from your budget and allocate that money elsewhere.

It’s also important to assess your fixed expenses and see if there’s any chance you can save money on them. For example, is it possible to switch to a cheaper car insurance policy? Can you renegotiate your credit card interest to get a lower rate and pay off your debt faster?

Is the 50/30/20 budget right for me?

If you’re overwhelmed with the idea of ​​budgeting, the 50/30/20 budget can help simplify the process. Give yourself a few months to acclimate to the new amounts you should be spending in each category before deciding if the 50/30/20 budget is a good fit.

What are the benefits of a 50/30/20 budget?

The 50/30/20 budget streamlines budgeting by dividing spending into three main categories: needs, wants, and savings/debt repayment. This type of budget can work for anyone, whether they have a high salary or a low income.

What is the best budgeting method?

The best part about budgeting is that there isn’t one specific method that’s best. Everyone’s finances are different, and so is how each of us manages our money. Finding the best budgeting method for you will take a lot of trial and error, but once you find what works for you, you’ll be on your way to financial success.

Eleanor C. William