Budget Basics: 50/30/30 Budget Method

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If you checked out our last post, Creating a Budget System that ACTUALLY Works, you’ll remember that the tips included creating a system that is easy to use and clone each month. I’m excited to introduce you to a simple budget method that not only creates a solid budgeting foundation to build upon, but is also easy to implement month after month.

This budget method is called the 50/30/20 budget method. As the name states, this method involves dividing your income into three simple categories: 50% Needs, 30% Wants, and 20% Savings. These are the “official” names, but I also like to call these money categories Bills, Spending, and Goals.

Grab the FREE 50/30/20 budget worksheet in our shop and follow along!

Getting started 

It’s important to note that we are budgeting these amounts on take-home or net pay. For example, if your monthly take-home income is $400/month, your budget will look like this: $200 for Bills, $120 for Spending, and $80 for Goals.

Let’s talk about the categories. First up is our largest category: Bills (or Needs). These are items you have to pay for each month to survive. They’re also the items that typically have set due dates and amounts, but not always. Examples of these expenses include your rent/mortgage, utilities, phone bills, groceries, transportation, etc. Again, these are items you NEED to pay for — because believe me, we don’t often WANT to! This category gets 50% of your income.

Expenses in the Bills category may be fixed charges (like your car payment) but others fluctuate (like your electric bill or groceries). When setting up this budget method, aim to determine how much you typically pay, or in the case of groceries, how much you plan to pay. If you’re just starting with this method, give yourself grace, because it’s a work in progress and you can’t always anticipate those fluctuating expenses!

Tip: Review your account statements for the last three months to get an average of what you typically spend on the variable items. 

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Be mindful that your living expenses are not taking up more than 25–30% of your 50%. This is the typical rule in the personal finance realm. Housing costs can quickly get out of hand, so be mindful of your budget limits.

Up next, the Spending (or Wants) category takes up 30% of your paycheck. These are purchases you don’t absolutely need, but they’re items that definitely make your life better. These expenses could include eating out, entertainment, clothes, etc. Again, these items can either be fixed or variable in cost each month depending on the item. For example, you don’t need Netflix, but it has a fixed cost per month.

Finally, the Goals (or Savings) category. This is where you think about what you may be saving for. Whether that is emergencies, a large purchase, or travel, you’ll use 20% of your income for this.

You might be asking, Where does debt go

Debt can be incorporated into Bills because it has a due date, or it can be housed in the Goals section as a goal to pay off the debt. If you are paying extra on your debt, you could put the base payment in Bills and the extra payment in Goals. It’s up to you! Do whatever makes the most sense for you.

Estimate. Divide. Monitor.

To implement this budget system, you’ll take these three steps:

  1. Estimate income and expenses for the budget period.
  2. Divide your income into the 50/30/20 categories, then organize your expenses accordingly.
  3. Monitor your expenses throughout the month to see if what you actually spent aligns with the amount budgeted. Make adjustments for next month’s amounts as needed. 

Considerations for this budget method

  • These percentage breakdowns are meant to be a guide. If you find yourself with more than 50% of your income going to Bills, then go ahead and bump that up to 60% and adjust the other two categories. 
  • Do you like to budget by paycheck? Meaning, you make a budget every time you get paid versus one budget for the whole month? This system will work great for you! You’ll just employ the 50/30/20 rules for each paycheck, careful to divide up your monthly expenses amongst the amount of paychecks you receive. 
  • This budget is one of the simplest methods out there. If you are a person who struggles with budgeting, this is a great starter system. As long as you pay your bills and save, you don’t really need to keep tabs on Spending as long as you don’t exceed that 30% allotment. You’ll just know that you can buy whatever you want with your remaining amount in that category, but have the peace of mind that your bills are paid and you are advancing towards your goals.


  • Utilize our free worksheet designed specifically for this method.
  • Love using cash? This method is fantastic with cash envelopes. 
  • With a designated goal category, grab our goal planners, savings, or debt trackers to watch your financial goals become realities with each passing month!

Ready to give this method a shot? Let us know in the comments how it goes!

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DISCLAIMER: Although I do have experience in the personal finance field as an Accredited Financial Counselor® professional, I am not a registered financial planner, advisor, or investment agent. Budget Blueprints and any content or resources made available on this site is for informational and entertainment purposes only. I am sharing my personal experience which may not be applicable to others. I am not liable for any losses or damages related to actions or results related to the content in this website. If you need specific financial advice, consult with a licensed professional financial advisor/planner who specializes in your specific need area.