The FI/RE 50/30/20 Calculator

Wed Feb 15 2023

I was a huge fan of the 50/30/20 rule when I first discovered it in my early days of budgeting. Coined by the one and only, Senator Elizabeth Warren, in her book 'All Your Worth: The Ultimate Lifetime Money Plan', this simple budgeting rule provides a very easy to follow rule of thumb when starting to build your budget.

You can use the free 50/30/20 calculator below to calculate your monthly after tax income split between savings and , wants, and needs.

The 50/30/20 Calculator For FI/RE

What is the 50 30 20 rule?

The 50/30/20 rule is a budgeting guideline that helps people allocate their income into three main categories: needs, wants, and savings. The rule reccomends dividing your after-tax and paycheck deduction income into the following proportions:

  • 50% for Needs: This portion of your income should cover essential expenses that you cannot reasonably live without, such as housing, utilities, groceries, transportation, insurance, minimum debt payments, and other basic necessities.
  • 30% for Wants: This category includes discretionary spending on non-essential items and activities that enhance your lifestyle, such as dining out, entertainment, hobbies, vacations, and other personal preferences.
  • 20% for Savings and Debt Repayment: This segment is allocated for saving money and paying off debts. It includes contributions to savings accounts, retirement funds, emergency funds, investments, and extra payments towards debts like credit card balances or student loans.

I like the 50/30/20 rule because it offers a simple and flexible framework for managing your finances, ensuring that you cover essential needs, enjoy some discretionary spending, and prioritize saving and debt reduction.

So let's jump into the different ways to use the 50/30/20 rule.

How do I calculate the 50 30 20 rule?

The traditional 50/30/20 rule calculates your after tax income by allocating 50% to your "needs", 30% to your "wants" and 20% to savings. I'm a big fan of simplicity so this basic guide has always been a good gut check for me.

How to Use the 50/30/20 Budget Calculator

To use the 50/30/20 budget calculator you need two inputs:

  1. Your after tax income (AKA your take home pay)
  2. Decide what savings allocation you want

1. Input your monthly take home pay

First you need to enter your monthly take home pay. This is the amount of net income that hits your bank account after all of your retirement contributions, taxes and other pre tax deductions are taken out of your paycheck.

2. Input your savings and debt repayment rate

The Traditional 50/30/20 Budget

The standard split is 50% on needs, 30% on wants and 20% on savings and debt repayment. This is a fine approach but the 20% savings rate will still leave you with ~30 years until you reach financial independence.

The FI/RE Classic

You can also start with the "FI/RE CLASSIC" which is allocating 30% of your monthly income to savings, 50% to needs, and 30% to wants. These allocation percentages will result in you becoming financially independent in ~22 years!


Or you can get aggressive and choose the "FIERY FI/RE" which allocates 50% of your monthly income to savings, 30% to needs and 20% to wants. If you were able to stick to this budget year in and year out, you'd hit your FI/RE number in <15 years! This assumes you're starting from 0 and have no debt payments.

What is an example 50 30 20 budget?

Here is an example of my 50/30/20 budget from 2010 when I was making $80,000 annual gross income in NYC. I had a great salary but after the taxes and other deductions, I was left with a little over $4k/mo. Not necessary livin' large but enough to have fun and cover rent in one of the most expensive cities in the country.

I had $4,255/month in after tax income. Applying the traditional 50/30/20 budget to my income my allocation was as follows:

  • $2,127- 50% Needs: This barely cut it for me in NYC given the cost of rent and other fixed costs.
  • $1,276- 30% Wants: I was spending more here most months as I was in my early 20's with a good salary and terrible spending habits .
  • $851 - 20% Savings & Debt Repayments: I was drowning in credit card and student loan debt so this was barely leaving any extra for savings.

The problem with the 50/30/20 Budgeting Rule

However, I always struggled with 2 concepts with the traditional 50/30/20 budgeting advice. What if I want to spend more on wants and less on needs? What if I want to pursue financial independence and retire much early than the traditional retirement age?

50/30/20 Doesn't Always Align With Your Values

What if spending more of my discretionary spending on "wants" brought me more joy and I was still able to save 20%? Do I NEED to strictly stick to a 50/30 split between wants and needs?

I think the answer should be "you do you". If you're hitting your savings goals, you should spend the rest of your money on the things in your life that bring you the most joy and fulfillment, irrespective of if they are "needs" or "wants".

50/30/20 Doesn't Work Well for FI/RE

My other beef with the rule was that while the 20% savings rate is a great start, it would still take ~28+ years to hit your FI/RE number if you're starting from 0. That was a tough pill for me to swallow after I discovered the FI/RE community. As I mentioned above, you can use the free budget calculator to choose different FI/RE budgets in order for you to hit your FI/RE number much sooner than 30 years from now.

Use the 30% FI/RE Classic input for a basic financial independence budget that uses a 30% savings rate or use the "FIERY FI/RE" to allocate 50% to savings and achieve financial independence in <15 years!

Is the 50 30 20 rule good?

The 50/30/20 rule can be a great rule of thumb when you're starting to build your budget plan. It's simple, easy to use and helps you secure your financial future with a 20% savings rate. However, if you want to exit the rat race and transform your financial future by pursuing financial independence you'll need to adjust your budget allocation percentages accordingly in order to save more and hit your FI/RE Number sooner.

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