How Easy Is The 50 30 20 Budget Method: With Free UK Calculator?

budget Mar 27, 2021

Budgeting, as we always say at Boss Of My Money, ‘is the foundation of your financial success.’ While the word budgeting can sound restrictive and complicated, this is far from the truth. When you budget, you must be realistic about your spending and be intentional about spending your money by allocating it accordingly. 

There are lots of budgeting methods available. If you are new to budgeting, this can feel overwhelming, not knowing which budget method will work best for you. The key to finding a budgeting method that works for you is to try a few, then stick to the one that keeps you excited about budgeting and helps you achieve your desired goal to save, become debt-free or spend guilt-free.


The 50 30 20 Budget method is suitable for you if: 

  • You are not sure where to start with budgeting 
  • You want an easy and time-saving budgeting method 
  • You want to pay off debts and build long term savings steadily 
  • You want to stay on top of your bills 
  • You want a generous guilt-free portion for spending on your wants 

Let’s dive into what the 50 30 20 budget method is, how it works, run through a step-by-step process on creating one, and look at some examples and some popular questions around this particular budget method. By the end of this article, you will feel confident about what a 50 30 20 budget method is and will be ready to create your own by downloading our free 50 30 20 Budget Calculator Excel Spreadsheet below.


50 30 20 budgeting steps 


The 50 30 20 budget method is when you divide your take-home salary after-tax into three categories: 50% towards needs, 30% toward wants, and 20% towards savings, debt repayment and investing. 

Step 1: Calculate your 50 30 20 budget allocation


The first thing you want to do is calculate how much your take-home after-tax is and then divide that into three categories. Use our Free 50 20 30 Budget Calculator below to work out your allocation.


50 30 20 Budget Calculator
Mobile users may prefer using the calculator in desktop view




Step 2: Assign 50% towards your needs

Now that you know how much of your income will go towards needs, let’s look at what expenditure items you can include in your need's category. Your needs include any essential bills, essential living costs, payments for taxes and credit cards. 

Use this list as a guide to determine what your 50% needs category would include: 

  • Rent/mortgage
  • Food
  • Council Tax
  • Utility bills (gas, electricity, water, internet)
  • Contracts (mobile phones, landline/internet providers)
  • Travel to work
  • Childcare/ Child maintenance
  • Minimum payments on debts
  • Fines/charges 
  • Insurance (health, life, income protection)
  • Car payments (Hire purchase, lease, insurance, MOT, road tax, parking etc.)

It’s important to remember that your essential expenses may look different from the above, and that’s ok. Only you can decide what is essential and what isn’t. 


Step 2: Assign 30% towards your wants

Your wants category would include expenses for the things you enjoy but are non-essential. Non-essential can be defined as anything that is not a basic need, such as: 

  • Eating out
  • Subscriptions
  • Entertainment 
  • Health and beauty
  • Luxury bags, clothing and accessories
  • Luxury gadgets
  • Holidays and trips 

It’s easy to go overboard with your wants. Remember the last time you justified something you wanted to buy and even with that quiet still voice, telling you don’t do it- you bought it anyway. For this reason, the 50 30 20 budget method is excellent for spenders as it gives room for guilt-free spending within a budget. 

You can also get your wants category to stretch by shopping around for deals, buying items second hand and selling things you no longer need to fund new things you want to buy.


Step 4: Assign 20% towards your savings/investments and debts


The final category in the 50 30 20 budget is the savings, debts and investing category. Here you allocate 20% of your total take-home income towards any debts you have, building your emergency fund, savings towards short- and long-term savings and investing.

Here are some ideas of what you might include in the 20% category: 

  • Pay extra towards debts 
  • Emergency Fund
  • Savings for retirement 
  • Holidays
  • Buy a car
  • Deposit for a house
  • Start a family 
  • Kids' education
  • Dreams and life goals 


Questions about 50 30 20 budget 

Is allocating 30% of my income to wants wise?
You may want to consider reducing your wants allocation to allow you to pay off debts (especially high-interest debts) and save for your goals much quicker. Remember, the percentage allocation is not set in stone, and you can be flexible with it. 

What if my needs are more than 50% of my income?
The 50 30 20 rule’s whole point is that your needs must total to 50% of your income. If you discover that your basic cost of living is more than 50% of your income, there are a few changes you can make.

  • You can first try to reduce your essential bills to 50% by reviewing your budget
  • Downsizing
  • Changing energy providers
  • Spending less on your food budget
  • Getting rid of your car if you don’t need to have one.

If 50% for your needs remains unrealistic, you may want to try another budget method like zero-based budgeting or the 80/20 rule, where you can combine your needs and wants into 80% and 20% for savings and debts. 

30% for wants is a lot of money to allocate to wants if you have high-interest debts and no savings 
If you have high-interest debts and no savings, you can reduce your wants allocation to 20% and use the extra 10% towards your debts and savings category to allow you to become debt-free and build your savings faster. Although it goes against the 50 30 20 budget rules, this method could make more sense for someone willing to sacrifice their wants to become debt-free and save money quicker. 


It’s a wrap


Now you know that the 50 30 30 budget method falls into the ‘easy budgeting’ category and is famous for its generous allocation towards wants. You can also see why the 50 30 20 budget method is attractive for individuals who want to spend guilt-free without entirely neglecting their essential bills and saving goals. 

Like any budget method, the 50 30 20 budget is used as a planning tool. More than just allocating expenses to categories each month, it’s essential to track your progress by reviewing your previous and current months spend and continuously making adjustments to improve your money management as you go. 

Now that you know how to do a 50 30 20 budget, you can start yours now by using our Free 50 30 20 Budget Calculator above. You can also download it for future use.  Do get in touch and let us know if this budget method works for you and what you love or hate about it.



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