50/30/20 Budget Calculator – NerdWallet

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Use our 50/30/20 budget calculator to estimate how you might divide your monthly income into needs, wants and savings. This will give you a big-picture view of your finances. The most important number is the smallest: the 20% dedicated to savings. Once you achieve that, perhaps with an employer-sponsored retirement plan and other automated monthly savings transfers, the rest — that big 80% chunk — is up for debate.

That leaves 50% for needs and 30% for wants, but these are parameters you can tweak to suit your reality. For example, if you live in an expensive housing market, your monthly mortgage or rent payment might spill a bit into your “wants” budget. Budgets are meant to bend but not be broken.

Before you build a budget

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50/30/20 budget calculator

Our 50/30/20 calculator divides your take-home income into suggested spending in three categories: 50% of net pay for needs, 30% for wants and 20% for savings and debt repayment.

Find out how this budgeting approach applies to your money.


Savings and debt repayment

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What is the 50/30/20 rule?

The 50/30/20 rule is a popular budgeting method that splits your monthly income among three main categories. Here’s how it breaks down:

Monthly after-tax income

Before you can slice up your 50/30/20 budget, you need to calculate your monthly take-home income. This figure is your income after taxes have been deducted. It’s likely you’ll have additional payroll deductions for things like health insurance, 401(k) contributions or other automatic payments taken from your salary. Don’t subtract those from your gross (before tax) income. If you’ve lumped them in with your taxes, you’ll want to separate them out — subtract only taxes from your gross income.

50% of your income: needs

Necessities are the expenses you can’t avoid. This portion of your budget should cover required costs such as:

  • Minimum loan payments. Anything beyond the minimum goes into the savings and debt repayment bucket.

  • Child care or other expenses that need to be covered so you can work.

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30% of your income: wants

Distinguishing between needs and wants isn’t always easy and can vary from one budget to another. Generally, though, wants are the extras that aren’t essential to living and working. They’re often for fun and may include:

20% of your income: savings and debt

Savings is the amount you sock away to prepare for the future. Devote this chunk of your budget to paying down existing debt and creating a financial cushion.

How, exactly, to use this part of your budget depends on your situation, but it will likely include:

  • Saving for retirement through a 401(k) and perhaps an individual retirement account.

  • Paying off debt, beginning with high-interest accounts like credit cards.

The 50/30/20 budget rule divides take-home income like so: 50% for necessities, 30% for wants and 20% for savings and debt repayment.

A smart view of your financial health

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