50/30/20 Budget

About

The 50/30/20 budget is a straightforward method for organizing expenses into three main categories: needs, wants, and savings. It allocates 50% of one's after-tax income to essential expenses like housing, utilities, food, and transportation. This ensures that basic living costs are covered without overspending. The needs category includes necessary expenses that cannot be avoided, such as rent or mortgage payments, groceries, and minimum debt payments. The remaining 30% is allocated to discretionary spending, or wants, which includes entertainment, dining out, and hobbies. This allows for personal enjoyment while maintaining financial discipline. The final 20% is dedicated to savings and debt repayment, focusing on building an emergency fund, retirement savings, and paying off high-interest debt. This approach simplifies budgeting and helps individuals achieve financial stability by balancing current needs with future goals.