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The 50/30/20 rule
Rule of thumb€
€
target 50%50%
€
target 30%30%
€
target 20%20%
What is the 50/30/20 rule?
A budgeting guideline that splits net income into three buckets: 50% on needs (housing, food, utilities, minimum debt payments), 30% on wants (entertainment, subscriptions, dining out), and 20% on savings and investments.
Formula
50% Needs · 30% Wants · 20% Savings
Your result
You're putting 50% toward needs, 30% toward wants, and 20% toward savings, against a 50/30/20 guideline.
Assumptions & limitations
A guideline, not a rule. Cost of living, dependents, and debt payoff goals all change what a healthy split looks like for a given household.
Where to start
- Needs. Needs are usually the biggest lever: renegotiating rent, insurance, or a phone plan saves the same amount every single month, without a single day of willpower.
- Within that 50%, housing (rent or mortgage) alone should land around 35% of net income — about €700 at your current income. If it's eating more than that, treat it as its own line item to fix first.
- Wants. Review recurring subscriptions every few months. Cutting the ones you forgot about is the easiest slice of the 30% to shrink.
- Leave roughly 5% of net income — about €100 — as no-questions-asked money: spend it however you want, with zero justification required.
- Savings. Whatever you free up from needs and wants, route straight into investing rather than more spending: money invested earlier compounds longer, for a materially better position later.