50/30/20 Budget Rule
The 50/30/20 rule divides your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. It's one of the most accessible budgeting frameworks available.
2 min read · Updated June 2026
Needs (50%): essential, non-negotiable expenses — rent, utilities, groceries, transport, insurance, minimum debt payments. Wants (30%): discretionary spending — dining out, entertainment, subscriptions, travel. Savings (20%): emergency fund, investing, extra debt repayment.
The framework's greatest strength is simplicity. It doesn't require tracking every coffee. It provides a structural guardrail and explicitly carves out 20% for wealth building — which many people otherwise never prioritise.
In high cost-of-living cities, the "needs" category routinely exceeds 50%. Adjusting to 60/20/20 or 70/15/15 is pragmatic. What matters more than precise percentages is the habit of intentionally allocating toward savings.
For FIRE practitioners, 20% is a starting floor — most aim for 40-60%+. But for anyone beginning their financial journey, getting to 20% is an excellent first milestone.
The simplest way to implement: automate your 20% savings on payday before spending on anything else. Pay yourself first, spend what's left.
Richify's AI agents help you map your actual spending to the 50/30/20 framework — identifying where you are today and where the easiest wins are to reach your savings targets.
