The 50/30/20 Rule

The 50/30/20 rule is a simple way to plan a monthly budget from your after-tax income. Half of your take-home pay goes to needs: housing, utilities, groceries, transportation, insurance, and minimum debt payments. Thirty percent goes to wants, the discretionary spending like dining out, entertainment, and travel. The last 20 percent goes to savings and paying down debt faster than the minimums.

Because rent sits inside the needs bucket alongside your other essentials, keeping rent well within that half leaves room for everything else you must pay. The rule is a starting framework, not a hard limit: in a high-cost area the needs share often runs higher, and someone aggressively paying off debt might shift more toward the savings bucket. Our rent affordability calculator applies the split to your take-home pay so you can see how a target rent fits.