Use the 50/30/20 rule as a starting framework

Divide your after-tax income into three buckets: 50% for needs (rent, groceries, insurance, minimum debt payments), 30% for wants (dining out, entertainment, subscriptions), and 20% for savings and extra debt payments. Track your spending for one month to see where you actually stand, then adjust.

Why It Works

The 50/30/20 rule is simple enough to remember and flexible enough to adapt. It gives you a clear target for each category without requiring you to track every single purchase.

Tips

• If your needs exceed 50%, focus on reducing the biggest fixed costs first (housing, car payment)
• The 20% savings bucket should include retirement contributions, emergency fund, and debt payoff
• Adjust the ratios to fit your situation — in high-cost cities, 60/20/20 may be more realistic