50/30/20 rule

The 50/30/20 rule is a simple guideline for splitting your after-tax income: roughly half towards needs, a third towards wants, and a fifth towards savings and debt repayment beyond minimum payments. The name comes from those three shares.

It is a starting point rather than a rule you must follow, and it suits some incomes and housing costs far better than others. Many people find their essentials take more than half, which is a signal to adjust the shares rather than abandon the plan.