The 50/30/20 rule is a simple way to plan a monthly budget without tracking every purchase. You split your income after tax into three parts.
- 50% for needs: rent, food, bills, transport, insurance and minimum loan payments.
- 30% for wants: eating out, shopping, trips, subscriptions and hobbies.
- 20% for savings: an emergency fund, investments and paying debt faster.
An example
With a monthly income of 60,000 after tax, the rule gives 30,000 for needs, 18,000 for wants and 12,000 for savings. The budget planner shows the same split in any of several currencies and lets you change the shares.
When needs cost more than half
In expensive cities, rent and bills often take 60% or more. That does not mean the rule has failed. Lower the wants share first, for example 60/20/20, and keep saving something every month. Even 10% builds a habit and a cushion.
Start with the emergency fund
Before investing, aim for three to six months of needs in an easy-to-reach account. This stops a surprise bill from turning into a loan.
Check your real spending
Look at last month’s bank or UPI statement and add up what went to needs and wants. Enter them in the planner to see whether you are saving as much as your plan says. Many people find the wants share is larger than they thought.
Make it automatic
Move your savings on payday, before you can spend it. A standing instruction to a savings or investment account works better than good intentions.
When to change the split
Change the numbers when your life changes: a new job, a baby, a loan or a big goal. Review the plan every few months and keep it simple enough to follow.