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Glossary Finance

Budget (50/30/20 rule)

A budget is a plan for spending and saving income; the 50/30/20 rule allots 50% to needs, 30% to wants and 20% to savings and debt repayment.

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In more detail

On $4,000 of take-home pay that is $2,000, $1,200 and $800. It is a starting guide, not a law; high-cost areas often need a larger share for needs.

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Compare your actual spending against the 50/30/20 budgeting rule (or your own custom percentages) across needs, wants, and savings.

See also

  • Glossary Emergency fund
    An emergency fund is cash set aside for unexpected costs such as job loss or repairs, commonly three to six months of essential spending.
  • Glossary Net pay
    Net pay, or take-home pay, is what you receive after taxes and deductions are subtracted from your gross pay.
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