2025 Update: Inflation, rising rent, and the cost of literally everything has people wondering if the 50/30/20 rule still works — and honestly? It can, but it’s not one-size-fits-all anymore. If you're in a high-cost-of-living area or juggling debt, your percentages might need to flex. But I still love the 50/30/20 method as a starting point because it forces you to look at the big picture: needs, wants, and savings — all accounted for.

In 2025, I recommend using a budgeting app that lets you customize these categories based on your season of life. Whether you're paying off loans, saving for a home, or just trying to keep up, the core idea still holds: intentional money choices that reflect your priorities. If your version looks more like 60/20/20 or 70/10/20 for now? That’s okay. The point is to know where your money’s going and feel in control.

What is the 50-30-20 Budget Method?

Also known as The Balanced Money Formula (proposed by Elizabeth Warren and Amelia Warren Tyagi in their book, All Your Worth), the 50-30-20 budget method is perfect for first-time budgeters and those who don’t want to hassle with individual expense categories. 

How Does the 50-30-20 Budget Method Work?

This budget method works by allocating your after-tax income into 3 portions:

• 50% – Needs like shelter, transportation, utilities, debt, and food.
• 30% – Wants or nonessential expenses that enhance your lifestyle such as gym memberships, cable, beauty essentials, or entertainment.
• 20% – Savings for rainy day funds or any after-tax retirement savings.

To stay within the 50-30-20 percentage brackets, you may need to make adjustments to current spending habits or get out of debt, but once you do, you’ll have a long-term, sustainable budget spending plan.

50-30-20 Budget Example

For example, let’s say your income for this month is $3000:

• 50% goes to the essentials (things you have to pay no matter what). This means your rent or mortgage, utilities, food, transportation, and debt should not exceed $1500 that month.

• 30% leaves $900 to spend on the good stuff. Spend it on clothing, entertainment, a massage, or hire a babysitter and cleaning service. Just stay within 30% of your income for that month.

• 20% will go into savings, which leaves you $600. After 6 months of savings, you’ll have $3600!

This is a “perfect” scenario of course, but it should give you an idea of how this budget method works (provided you’ve wrangled in all your expenses to fit within each percentage block).

The hardest part is sticking to a 50% “Needs” budget. When you first allocate percentages, you may find your current expenses take up an 80% or 90% scale. Some people find they have too much debt to be able to stick to a 50% budget, which is how the 50-30-20 method shows you where to make changes and adjustments to your budget so your money can do more for you.

The 50-30-20 Budget Worksheet

The 50-30-20 budget worksheet and printable that I offer in my freebie vault are built on the 50-30-20 model. The budgeting template printable is included in the vault as well as an Excel sheet that takes your take-home pay and automatically calculates your category totals for you. Yay! Click here to subscribe and get free access. And here are four other budgeting examples we like from personal finance bloggers.