The 50/30/20 Calculator

 

The 50/30/20 rule breaks down your budget into 3 simple categories: 50% for needs, 30% for wants, 20% for savings and additional debt payments.

When you are creating your budget please ensure to use  your monthly after-tax income. In other words your Net Income.

50% – of your income: Needs. Necessities are things that are non-negotiable and must be paid.

These Necessities include:

  • Housing
  • Food
  • Transportation
  • Utilities
  • Insurance
  • Minimum debt/loan payments
  • Child Care expenses

 

30% – of your income: Wants. Wants are what you spend money on that aren’t essential. This is the category where you get to choose what’s important to you.

  • Monthly subscriptions
  • Travel
  • Entertainment
  • Meals Out
  • Shopping

 

20% – of your income: Savings and Debts. This is where you put money away for your short and long-term savings as well as any debt payment over and above the minimum payments.

How you use this section is depending on your current situation and the goals that you want to accomplish. Some examples are:

  • Starting and growing an emergency fund
  • Short-term savings for future expenses
  • Short-term savings for a vacation, new car
  • Long-term savings for retirement, down payment on a house

The 70/20/10 Calculator

 

The 70/20/10 rule breaks down your budget into 3 simple categories: 70% for all your spending needs, 20% for savings, 10% for debt repayment,additional investments .

When you are creating your budget please ensure to use  your monthly after-tax income. In other words your Net Income.

70% – of your income: Spending. All and everything that you spend on a monthly basis.

These spending items may include:

  • Housing
  • Food
  • Transportation
  • Utilities
  • Insurance
  • Minimum debt/loan payments
  • Child Care expenses
  • Monthly subscriptions
  • Travel
  • Entertainment
  • Meals Out
  • Shopping

 

20% – of your income: Savings. The 20% should be broken down to 10% family savings and 10% Short and long-term savings. You can also break it down further. For example 10% Long-term, 5% – Emergency Fund, 5% family savings. Some items that can be utilized in this area are:

  • Retirement
  • Saving for a family vacation
  • Emergency Fund
  • New furniture
  • Unexpected expenses(Christmas gifts, birthdays)

 

10% – of your income: Debt/Investment/Education. The final 10% is for additional debt payments, further investments specifically in the market, more risky investments.(based on your risk tolerance). Additional future education savings for your kids. If you are currently in debt, I would recommend using this full 10% for that purpose.