Monthly Budget Calculator (50/30/20) (2024)

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

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

How To Use the 50/30/20 Budget Calculator

A budget calculator can be a useful tool to help evaluate your monthly income and where it’s going each month. A 50/30/20 budget calculator, specifically, will split 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. That’s the amount you receive each month from paychecks and other income sources after taxes have been deducted. Usually, after-tax income also reflects deductions for health insurance and any employer-sponsored retirement plan, like a 401(k).

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

The calculator will split your after-tax income into the three categories according to the different allocation percentages. These results are 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 U.S. senator) Elizabeth Warren and her daughter, Amelia Warren Tyagi, in their book All Your Worth: The Ultimate Lifetime Money Plan.

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

Mandatory expenses, which are expenses you “need” to pay and can’t avoid, should account for about 50% of your income. These expenses include:

• Mortgage or rent payments
• Utilities
• Health care
• Basic groceries
• Transportation costs
• Child care costs

Discretionary costs, also referred to as “wants,” should take up about 30% of your income. This category of spending includes:

• Dining out
• Shopping
• Entertainment
• Travel and vacations

Savings and debt payments should account for 20% of your income. This category will focus on:

• Paying down student loans
• Growing your retirement savings
• Paying down credit card debt
• Building an emergency fund

How To Make a Budget Plan

Making a budget plan can sound intimidating, but it doesn’t have to be. A budget plan is a helpful tool that will give you a better idea of where you stand financially. When you see your overall financial picture, it will be easier to create realistic goals along your financial journey, such as for purchasing a home or saving money for a wedding.

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

Income

For most people, income consists of take-home pay from a job. 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’ll need to know exactly how much you receive before trying to make a budget plan. If your income varies each month (for example, maybe you work in the service industry and rely on tips as your main source of income), you can build a budget plan based on the average of your monthly income for the past six months.

Expenses

Expenses are what you spend your income on. Expenses can vary, but categorizing them into “wants” and “needs” can make it easier to figure out where your money is going.

Overspending can be one reason why you might find your budget doesn’t work. It can be easy to indulge a little too much on a night out, or make an impulsive shopping purchase that wasn’t planned for. Keep in mind that you don’t have to follow a budget down to every last penny; if you end up splurging on a new item, you can find other places to make up for the purchase, maybe by cutting down 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. Some people come up with their own method, while others use one of the best budgeting apps for a budget planner. In this case, the 50/30/20 budget planner allows you to allocate money for debt and savings goals while also allocating funds to spend on things you may want but 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 go toward each category, you’ll need to know exactly how much money you’re making. It’ll be the basis for all of your calculations.

For example, say your monthly take-home pay is $4,000. Applying the 50/30/20 rule would give you a budget of:

• 50% for mandatory expenses = $2,000 (0.50 X 4,000 = $2,000)
• 30% for wants and discretionary spending = $1,200 (0.30 X 4,000 = $1,200)
• 20% for savings and debt repayment = $800 (0.20 X 4,000 = $800)

Other Budgeting Methods

The 50/30/20 budget plan is just one way to manage your money each month. There are some other budgeting methods you might consider for tracking income and expenses. Here’s a closer look at how they work.

80/20 Budget

The 80/20 budget assigns 20% of your net income to savings or debt repayment each month, while allocating the remaining 80% to wants and needs. It’s sometimes referred to as the “pay yourself first” budget, since you’re meant to take 20% off the top and put it into savings before paying bills or spending any money.

This budgeting method gives you a little more leeway in deciding how much money to dedicate to each category. Should your expenses in the “needs” category be greater one month, you’d just have to dial back what you spend on wants to stay on-budget.

You also have some flexibility in deciding what to do with the other 20%. If you have no debt to repay, for instance, you might put the entire 20% into a high-yield savings account to grow your emergency fund. Or you may do a 50/50 split and put some money into savings and invest the rest.

Zero-Based Budgeting

Zero-based budgeting is a budgeting system that requires you to give every dollar of your income a job. The end goal is to have $0 left over so there’s no chance of wasting any money.

How you decide to divide your income is entirely up to you. So, you might use a percentage-based approach and put 50% to needs with the rest split between savings and wants. Or you might go through your budget categories and assign a dollar amount to each individual expense category.

If you opt for this budgeting method, using a zero-based budget app might be the easiest way to track. You can enter in your income and expenses to easily see where all of your money is going at a glance.

Envelope Budgeting

Envelope budgeting can be used in conjunction with a 50/30/20 budget or independently of it. With this budgeting system, you assign budget categories to individual envelopes each month. You then fill the envelopes with the amount of money you’ve assigned to that category. You might have seen this referred to as “cash stuffing” on social media.

As you make purchases in different budget categories, you spend down the cash in your envelopes. Once an envelope is empty, you can’t spend any more in that category until the next budgeting period begins.

Envelope budgeting might be a good fit if you’d like to avoid the temptation of overspending with a debit card or credit card. But if you only spend with plastic and you’d like to give this budgeting method a try, there are apps that you can use to create a digital envelope system.

Frequently Asked Questions (FAQs)