Budget Calculator (50/30/20)

The 50/30/20 rule is a simple budgeting framework that splits your after-tax income into three categories: 50% for needs (essential living expenses), 30% for wants (discretionary spending), and 20% for savings and debt repayment. It was popularized by Senator Elizabeth Warren in her book 'All Your Worth' and is widely used as a starting point for building a personal budget.

Needs are expenses you cannot avoid without serious consequences — rent or mortgage, utilities, groceries, health insurance, minimum debt payments, and transportation to work. Wants are things that improve your quality of life but are not strictly essential — dining out, streaming subscriptions, vacations, new clothes beyond basics, and entertainment. When in doubt, ask: 'Could I survive without this for a month?' If yes, it's likely a want.

Always use your after-tax (take-home) income — the amount that actually lands in your bank account after federal and state taxes, Social Security, and Medicare are withheld. Using pre-tax income inflates your budget categories and leads to overspending. If you are self-employed, estimate your tax liability and subtract it from gross income to arrive at your effective take-home figure.