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The 50/30/20 budgeting method simplifies how much money to allocate to your wants, needs and savings. Having a fixed percentage for each category takes the guesswork out of how much you should be spending.
Enter your monthly after-tax income to this free budget calculator to determine how your 50/30/20 budget would look.
How to Use the 50/30/20 Budget Calculator
A budget calculator can be a useful tool to help evaluate your monthly income and where it’s going each month. A 50/30/20 budget calculator, specifically, will split your income into three different categories: 50% for your needs, 30% for your wants and 20% for your savings.
To use the 50/30/20 budget calculator, enter your monthly after-tax income. That’s the amount you receive each month from paychecks and other income sources after taxes have been deducted. Usually, after-tax income also reflects deductions for health insurance and any employer-sponsored retirement plan, like a 401(k).
Once you enter the after-tax amount, click “Calculate.”
The calculator will split your after-tax income into the three categories according to the different allocation percentages. These results are how you should spend your money each month according to the 50/30/20 rule.
What Is the 50/30/20 Budget?
The 50/30/20 budget is a simple budgeting strategy that can help you get started with a budget, or get back on track after a setback. It was made popular by then-professor (and now U.S. senator) Elizabeth Warren and her daughter, Amelia Warren Tyagi, in their book All Your Worth: The Ultimate Lifetime Money Plan.
This budgeting method makes it easier to budget by splitting your income into three buckets: wants, needs and savings. Having only three categories to budget into can be much less overwhelming than more detailed budgets.
Mandatory expenses, which are expenses you “need” to pay and can’t avoid, should account for about 50% of your income. These expenses include:
- Mortgage or rent payments
- Health care
- Basic groceries
- Transportation costs
- Child care costs
Discretionary costs, also referred to as “wants,” should take up about 30% of your income. This category of spending includes:
- Dining out
- Travel and vacations
Savings and debt payments should account for 20% of your income. This category will focus on:
- Paying down student loans
- Growing your retirement savings
- Paying down credit card debt</…….