The 50/30/20 rule: how to split your salary (with examples)

The 50/30/20 rule is the simplest way to split your salary without complicated spreadsheets: 50% goes to needs, 30% to wants and 20% to savings. It was popularised by Elizabeth Warren and Amelia Warren Tyagi in their book “All Your Worth” and has become the starting point of countless personal budgets.

What the 50/30/20 rule is

• 50% needs: what you must pay regardless. Rent or mortgage, bills, groceries, commuting, compulsory insurance, minimum loan repayments.
• 30% wants: what you choose and makes life enjoyable. Eating out, hobbies, streaming, travel, shopping.
• 20% savings: emergency fund, goals (home, car, holiday), investing and paying debt off early.

How to calculate it on your salary

Always start from monthly take-home pay. Multiply by 0.5, 0.3 and 0.2 and you have your three numbers — or use the 50/30/20 calculator.

Need or want? The grey areas

A practical test: it's a need if stopping payment would cause a serious problem within a month. Everything else is a want, however attached you are to it.

• Groceries are a need, but the treats in the trolley are wants.
• A gym membership is a want (unless medically prescribed).
• A phone is a need; the latest model on finance is a want.
• Paying off debt beyond the minimum counts as savings.

When to adapt the rule

50/30/20 is a starting point, not a law. In some cities rent alone takes half your pay: then 60/20/20 or 70/20/10 is more realistic, and that's fine. What matters is that savings never drop to zero and that the numbers hold for months, not a week.

Using 50/30/20 with WeBudget

When you sign up to WeBudget, you enter your salary and the app suggests a 50/30/20 budget split into three groups: Essentials (50%), Fun (30%) and Savings (20%). Each group holds concrete categories, like Home and Groceries with their own budget, while the others draw on the group's free share and appear when you need them, from your expenses. Change everything freely, or start from what you really spend by uploading a bank statement. It's free and needs no bank connection.