Can you split a paycheck 50/30/20?

Drag each $100 block from the paycheck into needs, wants or savings. The targets are half for needs, 30% for wants and 20% for savings. Halfway through, something will go wrong, because it always does.

Paycheck $3,000

Still to place $3,000

Paycheck

50%

Needs

Target $1,500

30%

Wants

Target $900

20%

Savings

Target $600

The 50/30/20 rule

One way to split take-home pay so the bills, the fun and the future each get a share. It is a starting point, not a law. In an expensive city, needs can run past half, and the wants bucket is where that comes from.

Needs, 50%Housing, groceries, utilities and transportation. The bills you must pay to live and get to work.

Wants, 30%Dining out, hobbies, subscriptions and travel. The part that makes the month enjoyable.

Savings, 20%Emergency fund, retirement investing and paying down debt. Pay this one first, before the wants get to it.

Keep going

Paycheck calculatorWhat a $3,000 paycheck actually looks like after taxes, so you know the real number to split.→ Compound interestWhat the savings bucket turns into if you keep filling it.→ Debt destroyerIf part of your 20% goes to debt, see which balance to hit first.→ Budget lessonsThe rule in more depth, and what to do when your needs are more than half.→

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