If every month you wonder where your paycheck went, the 50/30/20 rule is the simplest starting point there is. No complicated apps, no 40-column spreadsheets.
What is the 50/30/20 rule?
It's a way to split your after-tax income into three big buckets: 50% for needs, 30% for wants and 20% for your future. Senator Elizabeth Warren popularized it, and it works for one simple reason: it's easy to remember and hard to break.
50% — Needs
What you'd have to pay even if you lost your job tomorrow:
- Rent or mortgage
- Utilities: power, water, internet
- Groceries
- Transport to work
- Minimum debt payments
If this bucket goes over 50%, it's almost never the coffees: it's usually housing or transport eating your paycheck. That's the big lever.
30% — Wants
Everything that makes life nicer but you could cut: outings, streaming, clothes you don't need, the treat on the corner. It's not "bad" money — it's money you choose to spend.
The goal isn't to cut out wants. It's to know how much you're giving them, on purpose.
20% — Your future
The bucket almost no one respects and the one that changes your life most over time:
- Savings and emergency fund
- Investing
- Extra debt payments, beyond the minimum
What if you live paycheck to paycheck?
The rule is a guide, not a law. If 50% isn't enough for the basics, use it as a target: start by setting aside even 5% and bump it up a point whenever you can. What matters isn't the perfect percentage, but that every dollar has a destination before it hits your account.
Take your monthly income and multiply it by 0.5, 0.3 and 0.2. Those are your three caps. In Finzcore you can set them per category and see in real time how much is left in each.