What counts as a need, a want, or savings?
Needs (about 50%)
Bills you'd still have to pay if you cut back to the basics: rent or mortgage, utilities, groceries, insurance, transportation to work, childcare, and the minimum payments on your debts. Shopping for a car? The car affordability calculator shows what payment fits next to your other needs.
Wants (about 30%)
Things that make life better but could be cut: dining out, streaming and subscriptions, travel, hobbies, the upgrade from a basic phone plan, and most shopping.
Savings and debt payoff (about 20%)
Emergency fund contributions, retirement savings beyond any payroll deduction, investing, and any debt payment above the minimum. Extra debt payments go here because they improve your net worth just like saving does. Saving for something specific? The savings goal calculator turns a goal and a date into a monthly amount, and the compound interest calculator shows how a monthly amount adds up over the years.
Why use take-home pay?
The rule, popularized by Elizabeth Warren and Amelia Warren Tyagi in All Your Worth, uses after-tax income: what actually lands in your account. If your employer already takes 401(k) or other retirement contributions out of your paycheck, you can count them toward the 20% as well.
When 50/30/20 doesn't fit
In expensive cities, or on a lower income, needs can easily take more than half your pay. That's why the calculator offers 60/30/10 and 70/20/10 splits. The goal is the habit: know where every dollar goes and send something to savings every month. If you're paying off high-interest debt, many people temporarily shift money from wants to the 20% to get out faster.
FAQ
How do I convert biweekly pay to monthly?
Multiply your paycheck by 26 and divide by 12. The calculator does this for you when you choose "Every 2 weeks". In two months of the year you'll get a third paycheck, which is a great time to boost savings.
Is a car payment a need or a want?
The minimum payment counts as a need if you need the car to get to work. Paying extra on the loan counts toward savings and debt payoff.
Does this calculator store my data?
No. Everything is calculated in your browser.
For education and planning only. This isn't financial advice.