What is the 50/30/20 budget?
The 50/30/20 budget splits take home pay into 50% for needs, 30% for wants and 20% for saving and paying off debt.
It is a simple starting point when you do not want to track every category. In expensive cities, rent or a mortgage can push needs well past 50%, so many people adjust the split.
People aiming for FIRE often flip it, saving far more than 20% and trimming wants.
Example
On $5,000 a month after tax, that is $2,500 for needs, $1,500 for wants and $1,000 for saving.