The 50/30/20 rule

A simple way to divide your money each month: at most half on what you need, at most 30 % on what you want, and at least 20 % saved.

4 min readUpdated Oct 2026

What is the 50/30/20 rule?

The rule comes from Elizabeth Warren and Amelia Warren Tyagi's book All Your Worth (2005). It splits your income after tax into three parts:

• Needs: at most 50 %. The bills you have to pay.
• Wants: at most 30 %. Everything else you spend money on.
• Savings: at least 20 %. Money put aside for later, including paying off debts early.

The two spending parts are limits and savings are a minimum. Spending less than half on needs is fine, and so is saving more than 20 %.

If part of your pay goes into savings before it reaches you, such as a voluntary pension contribution, count it in both your income and your savings.

Is it for me?

It fits when your rent and bills come to about half of your net pay or less, and your income is steady from month to month. It's a good first rule because it's easy to remember and leaves real room for the things you enjoy.

If rent alone takes 40 % of your pay, you'll likely go over the needs limit every month. Start with 60/20/20 instead; see below.

How much is that on my pay?

Say your net pay is 45 000 Kč a month.

If your needs come to 20 000 Kč, you're 2 500 Kč under the limit, and that money can go to savings or, within its own limit, to wants.

What counts as a need?

A useful test: a need is a bill you would still have to pay if you lost your job next month. Needs usually include:

• rent or mortgage payments, and energy
• groceries (food you cook, not eating out)
• getting to work
• insurance
• the minimum payments on loans and credit cards
• childcare you need in order to work

Wants are everything else: eating out, holidays, hobbies, streaming, clothes beyond the basics.

Some costs are partly both. You need a phone, but the part of the bill that pays for a better one is a want. Count the basic cost as a need and the rest as a want, or pick one and be honest with yourself about it.

Debt counts in two places. The minimum payment on a loan is a need. Anything you pay on top of the minimum to clear it faster counts toward your 20 % savings, as the book does.

What if my needs are over 50 %?

The rule is a target, not a test you pass or fail. High rent is the usual reason needs go past 50 %, especially in a big city or on one income.

If that's you, two common variations keep the same idea with more room for living costs:

• 60/20/20: needs up to 60 %, wants up to 20 %, at least 20 % saved. You keep the savings and give up some wants.
• 70/20/10: living costs, needs and wants together, up to 70 %; 20 % saved and 10 % for paying off debt or giving.

Getting closer over time counts too. If your rent stays the same while your pay rises, needs take a smaller share each year.

How do I make it stick?

• Save first. Move your savings out as soon as you're paid, rather than saving whatever is left at the end of the month. This habit is called "pay yourself first". In Flow, make savings a percentage of your salary, so they grow when your pay does.
• Start with an emergency fund. Before you invest, keep enough to cover three to six months of your costs somewhere you can reach quickly. That range is a common guideline rather than a rule from the book.
• Save part of every raise. When your pay goes up, raise your savings by part of the increase before your spending grows to fill it.

Try it in Flow