The 50/30/20 Budget

This is a formula you can use to help determine how much of your income you may want to put towards three major spending categories–needs, wants, and savings.

With this budget you would divide your take-home income in this way:

• 50% would go towards "needs," such as rent/mortgage, utilities, insurance, gas, groceries, minimum monthly debt payments.
• 30 % would go towards "wants," such as dining out, entertainment, hobbies, gym memberships, and entertainment.
• 20 % would go towards "saving" for future goals, such as paying off all of your debt, saving for an emergency fund, saving for a home, and investing.

A budget is simply a means of measuring and spending your money in a way that ensures your basic needs (such as food, shelter, electricity, insurance) are met every month, while hopefully leaving enough to fulfill your wants (like shopping, dining out, and entertainment), as well as money for saving for future goals.