How To Budget Your Money: The 50/30/20 Rule

Shawn Plummer

CEO, The Annuity Expert

Learn how to budget your income efficiently with the 50-30-20 rule strategy. First, divide your income, with 50% allocated to “needs,” 30% to “wants,” and 20% to “savings.”

The 50-30-20 Budgeting Strategy

Created by Senator Elizabeth Warren, the basic rule is to divide up after-tax income, and spend 50% of it on needs, 30% on wants, and 20% on savings. Here, we profile this easy-to-follow budgeting plan.

50 30 20 Rule For Budgeting

50% Of Your Income: Your Needs

You must pay for needs, like rent or a mortgage. This is because they are the things that you need to live. Needs do not include extras.

Spending about half of what you earn on needs would be best. If you are spending more, you can cut down on wants or try to live with a smaller home and car.

30% Of Your Income: Your Wants

Wants are things you spend money on that are not essential. This includes dinner, a movie, that new handbag, concert tickets, vacations, streaming services, or optional upgrades.

20% Of Your Income: Your Savings

Save 20% of the money you make. Please put it in a bank account and a retirement fund. Save three months’ worth of cash for emergencies. Then think about other goals like making more money.

The savings bucket can also include debt repayment. If you have money left over, you should repay the debt and save money.

Leftover Money

If you use the leftover money to consolidate payday loans into an affordable monthly payment plan. Use the money to make monthly payments on your consolidated payday loans. That will help you save money on interest. A smart money manager will use 50% of their income to fulfill their needs, like debt payments or savings, to clear debts.

Tip: Learn how to guarantee your future retirement income starting today.

Next Steps

The 50-30-20 rule is an excellent strategy for budgeting your income efficiently. By allocating 50% of your income to “needs,” 30% to “wants,” and 20% to “savings,” you will be able to make the most out of your money. This simple rule can help you stay on track with your finances and reach your financial goals. If you need help getting started, contact us for a quote. We would be happy to assist you in creating a budget that works for you.

How To Budget Your Money: The 50/30/20 Rule

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*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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