← GlossaryPersonal Finance

The 50-30-20 Budget

The 50-30-20 rule divides take-home income into 50% for needs such as rent, food and bills, 30% for wants such as eating out and entertainment, and 20% for savings and investments.

Why It Matters

It is not a law of nature, but it is a far better default than no plan at all.

In India

On a first salary of ₹40,000 a month, that means ₹20,000 for needs, ₹12,000 for wants and ₹8,000 for savings.