What is the 50-30-20 budget system?

The 50-30-20 budget is a personal budgeting plan made popular by Elizabeth Warren in her 2005 book, All Your Worth: The Ultimate Lifetime Money Plan“.

It’s a very simple way of breaking down your income into 3 categories. Needs 50%, Wants 30% and Savings 20%.

Using your net income (income after tax) it gives you a clear breakdown of where your spending should be each month. Use our quick calculator to see how your income breaks down.

  • Are you spending more or less in any of the 3 areas?
  • Where do you think you could do better?
  • Do you think you are totally lost with your personal budget?
  • If you need help fill in our free financial review. One of our advisors will review and come back with some suggestions.  

While everyone is different this simple formula can give you a quick idea of what your monthly spending should look like. The breakdown of each category are: 

Needs: The must-haves of everyday life. Include the costs required to live.

  • Rent/Mortgage
  • Utility Bills
  • Groceries
  • Transport to and from work/school
  • Minimum debt repayments 

Wants: The extras we spend every day but are not essential to life.

  • Takeaway coffees,
  • Weekends away,
  • Holidays,
  • Dining out,
  • Evenings out,
  • Gym memberships,
  • Subscription services (Netflix, Amazon Prime, Expensive tv packages).

    Savings: This is the amount you should be saving every month. You can use it for other things as well.

    • Pay down any debt,
    • Build your emergency fund (3 months, then 6 months),
    • Build longterm savings and pensions funds.

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