How to Use the 50/30/20 Budget Rule, Plus Free Templates

What is the 50/30/20 Budget Rule?

The 50/30/20 budget rule is a popular, easy way to see what you can afford to spend and save each month.

It works by dividing your monthly post-tax income into three categories:

• 50% to NEEDS: rent/mortgage, groceries, bills, transportation
• 30% to WANTS: entertainment, certain subscriptions, fun stuff
• 20% to FREEDOM: eliminating debt and building savings

For example, if you earn $50,000 per year after taxes, you have:

• $25,000/year or $2083/month for needs
• $15,000/year or $1250/month for wants
• $10,000/year or $833 to pay off debt or save for retirement and emergencies.

This approach allows for flexible spending while ensuring consistent savings

The 50/30/20 budget rule provides simple monthly spending guidelines that can help you make steady progress toward your financial goals.

With the free templates below, you can quickly see:

• How long it would take to save the recommended three months salary in an emergency fund.
• How long it would take to eliminate all your credit card debt.
• How long it would take to fully pay off all outstanding loans, including student loans and mortgages.

Of course, real life rarely cooperates with simple guidelines.

The 50/30/20 budget won’t work for everyone. In the real world, you need to prioritize wants and needs.

So you might decide to carry debt a bit longer while you build up your emergency fund. Or you might decide it’s worth it to spend more than 50% on living expenses.

The point is it’s up to you. Use the 50/30/20 guidelines to see what’s possible today as you make progress on your financial journey.

“The problem with budgets is they make you look back on your spending to make changes. What really happens is you look back and feel horrible. And you do that the next month and then the next month after that. What you should do instead is look forward, not backward.“

Ramit Sethi

Free 50/30/20 Budget Calculators

The following spreadsheet templates use simple formulas to calculate your custom 50/30/20 budget snapshot. They also provide a rough estimate of your net worth.

50/30/20 Budget For Microsoft Excel

50/30/20 Budget For Google Sheets

An alternative to the 50/30/20 Budget

Ramit Sethi’s “Conscious Spending Plan” builds on the 50/30/20 budget with more detailed categories such as Net Worth, Investments, Fixed Costs, and Savings Goals.

Sign up here to get the free template.

Add a 50/30/20 sheet to you Tiller Foundation Template

If you manage your money with spreadsheets powered by Tiller, you can easily adapt your Foundation Template with custom budget categories and category groups that follow the 50/30/20 approach:

Further reading

• The Top 5 Recommended Budgeting Strategies
• “This is Exactly How I Budget With Tiller”
• Can the rules of personal finance can fit on the back of an index card?
• How the One-Number Budget Keeps You In Control of Your Money