The 50/30/20 Rule:
how to budget
your salary
The simplest method to stop running out of money before month-end. Split your take-home pay into three buckets — needs, wants, savings — and it works at any income level.
What is the 50/30/20 rule?
The 50/30/20 rule is a budgeting method popularised by economist Elizabeth Warren in the book All Your Worth (2005). The idea is brutally simple: split your take-home pay into three fixed-percentage blocks and assign each one a clear purpose.
50% Needs
Everything you cannot cut: rent or mortgage, bills, groceries, transport, insurance, medicines. Stop paying these and you have a serious problem.
30% Wants
Everything you want but don't strictly need: restaurants, streaming, non-essential clothing, hobbies, travel, gym. You could reduce these if necessary.
20% Savings
Emergency fund, investments, pension, extra debt repayment. This slice goes out first — before you spend anything else. Not from the leftovers.
Calculate it for your income
Always base the calculation on your monthly take-home pay — what actually hits your bank account, not your gross salary. If you have variable income, use your 6-month average.
| Take-home pay | 50% Needs | 30% Wants | 20% Savings |
|---|---|---|---|
| £ / € 1,200 / mo | 600 | 360 | 240 |
| £ / € 1,500 / mo | 750 | 450 | 300 |
| £ / € 2,000 / mo | 1,000 | 600 | 400 |
| £ / € 2,500 / mo | 1,250 | 750 | 500 |
| £ / € 3,000 / mo | 1,500 | 900 | 600 |
| £ / € 3,500 / mo | 1,750 | 1,050 | 700 |
| £ / € 4,000 / mo | 2,000 | 1,200 | 800 |
| £ / € 5,000 / mo | 2,500 | 1,500 | 1,000 |
💡 Household? Use your combined take-home
If you live with a partner or family, add up all net monthly incomes and apply the rule to the combined total. Alternatively, each person applies the rule to their own salary and you consolidate shared expenses separately.
How to apply it in 5 steps
- Find your monthly take-homeLook at what lands in your bank account, not your gross salary. If you have multiple income sources, add them all together.
- List your fixed needsRent/mortgage, bills, transport pass, groceries, insurance. These barely change month to month. If they already exceed 50% of take-home, you need to act on them — not on your lattes.
- Set your wants budgetRestaurants, bars, streaming, clothing, weekends away, hobbies. The 30% cap isn't punishment — it's a guaranteed guilt-free allowance for enjoying your life.
- Automate your savingsSet up an automatic transfer on the day after your salary hits. The 20% goes to a separate account before you even see it. This single habit separates consistent savers from everyone else.
- Track and adjust monthlyCompare actual spending vs targets. If needs blow past 50%, find what's hiding there. If wants stay under 30%, spend that margin — it's yours.
Real example: Alex and Sam, £3,000 take-home
Alex (£1,800 take-home) and Sam (£1,200 take-home) live together in London. Combined: £3,000/month.
| Category | Bucket | Budget | Notes |
|---|---|---|---|
| Rent | Need | £ 1,050 | 35% of take-home — shared London flat |
| Groceries | Need | £ 300 | ~£75/week for two |
| Bills + internet | Need | £ 120 | Gas, electricity, water, broadband |
| Transport | Need | £ 130 | Monthly passes × 2 |
| Total needs | £ 1,600 | ~53% — slightly over, common in London | |
| Restaurants & bars | Want | £ 250 | ~2–3 meals out per week |
| Clothing | Want | £ 100 | £50 each |
| Streaming + hobbies | Want | £ 150 | Netflix, gym, books |
| Travel savings | Want | £ 200 | Set aside monthly for trips |
| Total wants | £ 700 | ~23% — under target, 7% flex | |
| Emergency fund | Saving | £ 400 | Target: 6 months of expenses |
| ISA / investments | Saving | £ 300 | Monthly index fund contribution |
| Total savings | £ 700 | ~23% — above target ✓ |
When 50/30/20 doesn't work (and how to adapt it)
The rule is an excellent starting point, but it's not dogma. Here's when you need to adapt it.
📍 High-rent cities (London, Dublin, Amsterdam)
If rent alone is 40–45% of take-home, needs will exceed 50%. Adapt to 60/20/20 temporarily and work on reducing housing costs (flatmate, different area, buying).
💳 Existing debt
If you're repaying high-interest loans or credit cards, redirect part of the 20% to extra repayment. Clear expensive debt first, then invest.
👶 Young children
Childcare, nursery, and school supplies inflate needs. Consider 55–60% needs temporarily and reduce wants, not savings.
💶 Lower incomes (< £/€1,200/mo)
At lower incomes, 50% may not cover real needs. Use the rule as a direction, not a current reality — it shows you what to work towards.
How migj helps you apply the 50/30/20 rule
Knowing the rule is easy. Applying it every month with real spending data is the hard part. migj does it automatically.
Import CSV from your bank
Download the CSV from your bank account and import it into migj. Transactions are categorised automatically — needs, wants, savings.
Live 50/30/20 dashboard
See instantly where you stand vs targets. If wants exceed 30%, the bar turns red — mid-month, while you can still course-correct.
Per-category budgets
Set a cap for each category (restaurants, clothing, hobbies). migj alerts you at 80% — you can still adjust before you blow the budget.
📥 Import your real spending in 30 seconds
migj reads CSV exports from your bank — Monzo, Starling, Revolut, N26, Intesa, UniCredit and more. No credentials shared, no API connection. Just the file you already have.