The 50/30/20 Budget Rule Explained
The 50/30/20 rule is one of the simplest ways to structure your budget. Here’s how it works and how BudgX helps you follow it.
What is the 50/30/20 rule?
Senator Elizabeth Warren popularized this rule in her book "All Your Worth." The idea: split your after-tax income into three buckets—50% for needs, 30% for wants, and 20% for savings and debt payoff.
Needs include rent or mortgage, utilities, groceries, insurance, and minimum debt payments. Wants are everything else that makes life enjoyable: dining out, subscriptions, hobbies. The 20% goes to savings, emergency fund, and extra debt payments.
Why it works
It’s easy to remember and doesn’t require tracking every penny. You get a clear picture of whether you’re over-spending on wants or under-saving. Many people find that 30% for wants is enough to enjoy life without guilt.
How BudgX helps
In BudgX, you can set up category budgets that align with 50/30/20. Our AI coach can nudge you when you’re close to the 30% wants cap or remind you to move the 20% to savings. You’ll see at a glance how your spending lines up with the rule.