Monthly Budget Planner

The 50/30/20 rule is a simple budgeting framework popularized by Senator Elizabeth Warren and her daughter Amelia Warren Tyagi in their book "All Your Worth: The Ultimate Lifetime Money Plan." It divides your after-tax income into three categories:

50% for Needs (Essentials)

Needs are expenses you must pay to maintain a basic standard of living and continue working. These include:

• Housing: Rent or mortgage payments, property taxes, homeowners/renters insurance.
• Utilities: Electricity, gas, water, internet, basic phone service.
• Groceries: Basic food and household supplies (not dining out or premium items).
• Transportation: Car payment, insurance, gas, public transit to get to work.
• Healthcare: Health insurance premiums, necessary medications, essential medical care.
• Minimum Debt Payments: Required minimum payments on credit cards, loans, student debt.
• Childcare: If required to work, basic childcare costs.

30% for Wants (Lifestyle)

Wants are non-essential expenses that improve your quality of life but aren't strictly necessary. These include:

• Dining Out: Restaurants, takeout, coffee shops, food delivery.
• Entertainment: Streaming services, movies, concerts, sports events, hobbies.
• Shopping: Clothing beyond basics, electronics, home decor, gifts.
• Travel: Vacations, weekend getaways, non-essential travel.
• Gym Memberships: Fitness classes, premium gym memberships.
• Subscriptions: Magazines, apps, premium versions of services.
• Upgrades: Premium cable, faster internet, newer phone, nicer car.

20% for Savings and Debt Payoff

This category focuses on building your financial future and includes:

• Emergency Fund: Building 3-6 months of expenses in accessible savings.
• Retirement Savings: 401(k), IRA, Roth IRA contributions.
• Extra Debt Payments: Payments above the minimum to pay off debt faster.
• Investment Accounts: Brokerage accounts, index funds, other investments.
• Savings Goals: Down payment fund, car replacement fund, education savings.

Key Insight: The 50/30/20 rule is designed for after-tax income (take-home pay). Calculate your monthly net income first—this is what hits your bank account after taxes, health insurance, and other payroll deductions.

This calculator helps you see how your income might be allocated using the 50/30/20 rule or your own custom percentages, and compare it to how you're actually spending.

1. Enter Your Monthly Take-Home Income
   This is your net pay after taxes—the amount deposited into your bank account each month. If you're paid bi-weekly, multiply one paycheck by 26 and divide by 12 to get monthly. If income varies, use an average of the last 6-12 months.
2. Choose Your Budget Rule
   Select the standard 50/30/20 split or create your own custom percentages. Custom percentages must add up to 100%. Consider using custom percentages if you live in a high-cost area (needs may be 60%+) or if you're aggressively saving (savings may be 30%+).
3. Enter Your Actual Spending (Optional)
   For the most useful insights, enter your current actual spending in each category. This allows the calculator to show you where you're over or under the recommended amounts. If you don't know your actual spending, leave these fields empty to just see the recommended allocation.
4. Review Your Results
   The calculator shows:
   • Recommended dollar amounts for each category based on your income and chosen rule.
   • Comparison of actual vs recommended spending (if you entered actual amounts).
   • Your actual savings rate vs the recommended rate.
   • A status indicator (healthy, tight, or overextended) based on your actual spending.
   • Visual charts showing allocation and comparisons.
5. Adjust and Experiment
   Try different scenarios: What if you reduced wants spending by $200/month? What if you used a 60/20/20 split? Use the calculator to model changes and see how they affect your budget.

Pro Tip: Track your actual spending for a month using your bank statements or a budgeting app, then enter those numbers here. You might be surprised where your money is really going.

The 50/30/20 rule is a starting point, not a rigid requirement. Here are common situations where adjustments make sense:

High Cost of Living Areas

If you live in San Francisco, New York, Boston, or other expensive cities, housing alone may consume 40-50% of your income. Consider a 60/20/20 or 65/15/20 split until you can increase income or find cheaper housing. The key is ensuring some money goes to savings even if needs are high.

Aggressive Debt Payoff

If you're paying down high-interest debt (credit cards at 20%+ APR), consider a 50/20/30 split with the extra 10% going to debt payoff. Once debt is eliminated, shift that 10% back to wants or increase savings further.

FIRE Movement (Financial Independence, Retire Early)

FIRE adherents often save 40-70% of income. If early retirement is your goal, consider 50/10/40 or even 40/10/50. This requires significant lifestyle adjustments but can lead to financial independence in 10-15 years instead of 30-40.

Low Income Situations

If you're earning minimum wage or entry-level pay, needs may consume 70-80% of income. Focus on any savings, even 5-10%, while working on increasing income through raises, education, or career changes. Building even a small emergency fund protects against falling deeper into debt.

High Income Situations

If you earn significantly more than needed for a comfortable lifestyle, avoid "lifestyle creep" where wants expand with income. Consider saving 30-50%+ while keeping wants relatively flat. A 30/20/50 split builds wealth much faster.

Variable Income (Freelancers, Gig Workers)

With unpredictable income, budget based on your average or lowest expected monthly income. During high-income months, save the excess as a buffer for lean months. You might use 40/20/40 during good months, with the extra savings smoothing out income volatility.

• New Graduate Starting First Job: Sarah earns $45,000/year ($3,000/month take-home). Using 50/30/20: $1,500 needs, $900 wants, $600 savings. She finds needs are actually $1,800 (city rent is high), so she adjusts to 60/25/15 for now: $1,800 needs, $750 wants, $450 savings. She plans to increase savings as she gets raises.
• Family with Children: The Martins earn $8,000/month combined. With childcare, their needs run high at $4,500 (56%). They use 56/24/20: $4,500 needs, $1,920 wants, $1,600 savings. As kids enter school, childcare costs drop, and they plan to shift the savings to 30%+.
• Aggressive Debt Payoff: Mike has $25,000 in credit card debt at 22% APR. His $4,000/month income goes to: $2,000 needs (50%), $600 wants (15%), $1,400 debt payoff/savings (35%). Once debt is paid off in 2 years, he'll shift to 50/30/20 and start building investments.
• Saving for a Down Payment: Lisa wants to buy a home in 3 years. She earns $5,500/month and uses 45/20/35: $2,475 needs, $1,100 wants, $1,925 savings. The extra 15% to savings accelerates her down payment goal from 5 years to 3.
• Semi-Retired Couple: The Johnsons have $6,000/month in retirement income (Social Security + pension). With no mortgage, their needs are low at $2,400 (40%). They use 40/40/20: enjoying retirement with more wants while still saving for unexpected expenses and legacy goals.

• Using Gross Income Instead of Net: The 50/30/20 rule applies to take-home pay, not your salary. Using gross income inflates all categories and doesn't reflect what you actually have to spend.
• Misclassifying Wants as Needs: Be honest about what's truly essential. That $200/month gym with a pool is a want, not a need. Premium cable is a want. The latest iPhone upgrade is a want. Needs are things you genuinely can't live or work without.
• Forgetting Irregular Expenses: Car maintenance, holiday gifts, annual insurance premiums, and medical copays are often forgotten. Divide these annual costs by 12 and include them in your monthly needs or wants.
• Not Tracking Actual Spending: Many people think they spend less than they do. Track every expense for a month to see where money really goes. Small daily purchases (coffee, snacks, apps) add up quickly.
• Treating the Budget as Set-and-Forget: Review your budget monthly, especially when starting out. Life changes, prices change, and priorities change. A budget that worked last year may not work now.
• Making the Budget Too Restrictive: If you cut wants to 0%, you'll likely fail. Budgets need to be sustainable. A moderate wants category prevents burnout and the "splurge" cycle that derails many budgets.
• Not Building an Emergency Fund First: Before investing or aggressively paying off debt, build at least $1,000-$3,000 in emergency savings. This prevents new debt when unexpected expenses arise.