The 50-30-20 Rule For Budgeting: Experts Weigh In

Budgeting might not sound sexy, but feeling empowered by your finances certainly is. Yet when it comes to balancing your books for necessities, wish-list items, major milestones, and the like, it can be challenging to know where to begin. Some turn to the 50-30-20 rule: a tried-and-true budgeting framework that covers your monthly expenses and long-term goals without feeling like you're being stretched too thin.

With the help of personal finance experts, we're unpacking everything you need to know about the 50-30-20 rule — including when it's worth tweaking the ratios to fit your unique and evolving financial needs.

Experts Featured in This Article

Angela Moore, CFP, is a money educator, speaker, coach, and financial guide with Fruitful, a financial membership service.

Kevin Mahoney, CFP, is a financial advisor and the founder and CEO of Illumint, a financial planning service.

What Is the 50-30-20 Rule?

The 50-30-20 budgeting rule calls for allocating your post-tax monthly income across the following categories:

In order to follow the rule, you should have a reliable resource — like a budgeting app or a good old-fashioned budget spreadsheet — to track money coming in and going out across these broad categories.

Benefits of the 50-30-20 Rule

“The 50-30-20 rule is a great foundational budgeting system,” says money educator Angela Moore, CFP. “It's easy to understand and implement as it provides a clear structure for managing finances, thus making it ideal for those wanting to get a grip on their financial situation.” In addition, Moore says it strikes a healthy balance between meeting immediate needs, enjoying life, and planning for the future.

This budgeting system is also flexible across subcategories, so it feels less restrictive, more forgiving, and ultimately more sustainable. For example, if you spend more than usual on dinners out with friends in a given month, you don't need to languish with guilt. Instead, you can prioritize cutting back on other types of discretionary spending in your “wants” category through month's end. Similarly, once you tackle paying off high-interest debt, you might choose to start allocating more money for your retirement account.

Plus, sticking to the 50-30-20 rule over time can help you manage lifestyle creep so you're spending and saving more mindfully with each hard-earned pay bump.

Drawbacks of the 50-30-20 Rule

As beneficial as the 50-30-20 rule can be, Moore says that it's best suited for people with a steady income. Gig workers, freelancers, and other professionals with less predictable earnings can still follow these ratios in theory, but it may be more complicated and less sustainable during lower-earning months. Irregular income could also make it harder to stay within your category limits (including if you prefer to automate transfers for your savings, investments, and debts).

Budgeting is an imperfect science, adds Illumint founder Kevin Mahoney, CFP, so it's important to keep your expectations in check. “It's challenging whether you're using the 50-30-20 rule or anything else because we don't know what the future looks like,” he says. “It often feels good initially to spell out what you want to spend in each category, but life inevitably throws something at us that we didn't expect that very quickly puts those numbers out of reach, or makes those numbers look different than we had hoped and planned.”

It's worth noting that an emergency fund — whether that's a few hundred dollars or at least three months' worth of income — is one of the best uses of savings, to start.

Mahoney discourages some from being too rigid with specific ratios and categories, especially if a perceived fault could lead you to feel guilty or give up on the budgeting process entirely. Instead, he emphasizes giving yourself flexibility and grace to stay the course.

When Is It Worth Adjusting the Ratios?

The 50-30-20 rule won't be a perfect fit for everyone. As such, Moore says you should make tweaks based on your personal goals, financial situation, and lifestyle changes.

Moore lists a few examples of individuals who may want to adjust the ratios:

Mahoney says that you don't need to hold yourself to standards that feel unmanageable for you in the moment, however, and that any progress is better than none at all. For instance, if you're living paycheck to paycheck and feel that saving 20 percent of your monthly income is impossible, he suggests trying to start with 3 or 5 percent. “See how that goes and if it's something that you feel like you absorbed pretty painlessly,” he advises. “If that goes well, then maybe later on in the year — or when you get a raise, change jobs, or your income's a little bit different — then maybe you can bump that number up to 7 or 10 percent.”

Getting into the habit of saving is crucial, no matter how much you have to work with as you're first starting out. Doing so not only builds momentum but also establishes comfort with and control over your finances, thus fostering a healthier and more abundant money mindset.

The Bottom Line

The 50-30-20 rule is a popular and effective system for budgeting since it addresses your financial past (debt), present (regular expenses), and future (savings, investments, and retirement). Since it's straightforward and allows for freedom and lenience across subcategories, it's easy to follow and mindfully spend within your limits.

While consistency is important, so is being comfortable with adjusting these ratios as you see fit. “I think this framework is sufficient as long as you don't hold so hard and fast to the specific numbers,” Mahoney says. “We all have slightly different financial circumstances, interests, and different costs of living, so we need guidelines or rules of thumb that we can rely on to get close enough to good with budgeting.” (Read: You don't need to strive for perfection.)

Mahoney and Moore both suggest tracking where your money goes and reviewing your budget regularly, both of which can help you set realistic expectations and goals. Your priorities and expenses will likely change over time, so it's important to be agile — especially when you experience setbacks. “Whether through your own decisions or things totally outside of your control, there are going to be parts of this that don't always go your way,” Mahoney says. “The greater ability you have to respond and incorporate that into your financial planning and decision-making, the more likely you are to stay on track over longer periods of time.”

Michele Ross is a freelance writer specializing in wellness, culture, and beauty. Her work has appeared in Well+Good, Coveteur, Editorialist, GQ, Vice, and Teen Vogue, with brand clients including Peloton, Moon Juice, and Hum Nutrition. She's grateful to cover her many interests — including but not limited to self-care, self-development, skin care, coffee, travel, and Korean culture.