A budget is not about spending less for the sake of it. It is a plan that tells your money where to go before the month starts, so you are not wondering where it went at the end. The 50/30/20 rule is one of the simplest ways to begin.
What the 50/30/20 rule says
Split your take-home pay (the amount that reaches your account after tax) into three parts:
- 50% for needs: rent, utilities, groceries, transport, school fees, loan instalments and insurance.
- 30% for wants: eating out, shopping, subscriptions, travel and hobbies.
- 20% for savings and debt repayment: an emergency fund, committee (kameti) contributions, savings and extra loan payments.
A worked example
Suppose your take-home pay is Rs 100,000 a month.
| Part | Share | Amount (Rs) |
|---|---|---|
| Needs | 50% | 50,000 |
| Wants | 30% | 30,000 |
| Savings and debt | 20% | 20,000 |
If your pay is Rs 60,000, the same split gives Rs 30,000, Rs 18,000 and Rs 12,000. Use the free Percentage Calculator for any other amount.
Adjust it for real life
The rule is a starting point. In many cities, rent, electricity and fuel take more than half of a salary. If your needs come to 65%, try 65/20/15 and aim to move towards the target over time. The point is to know your numbers and decide on purpose.
Steps to set up your budget
- Find your take-home pay. If you only know your gross salary, see our guide on gross and net salary.
- List fixed costs first: rent, instalments, fees and bills.
- Track three months of spending to see real figures, not guesses.
- Set the three shares and a limit for each category.
- Pay yourself first. Move the savings share out of your spending account on payday.
- Review once a month and adjust.
Build an emergency fund first
A common target is three to six months of essential expenses kept in an easy-to-reach account. Start small: even one month of needs protects you from borrowing when something unexpected happens.
Track it in Excel
If you prefer a ready-made sheet, the Personal Monthly Budget Planner shows budget against actual for every category, a full-year overview and a chart, in any currency. You can also keep it simple with a notebook or a phone note, as long as you review it every month.
This article is general information, not financial advice.