50/30/20 Budget Calculator

Formula

The 50/30/20 rule formula is as follows:

\[ \text{Necessities} = \frac{\text{Income} \times 50}{100} \]

\[ \text{Wants} = \frac{\text{Income} \times 30}{100} \]

\[ \text{Savings} = \frac{\text{Income} \times 20}{100} \]

The 50/30/20 rule is a simple budgeting framework that divides your after-tax income into three categories:

50% for necessities: essential expenses such as rent, utilities, groceries, and transportation.
30% for wants: non-essential expenses such as entertainment, dining out, and shopping.
20% for savings: saving for future needs or paying off debt.

Let's assume your monthly after-tax income is $4500. According to the 50/30/20 rule, your budget should be allocated as follows: