How to use the budgeting calculator
- Enter your monthly take home pay: what actually lands in your account. Not sure? Use my take home pay calculator first.
- Leave the split at 50/30/20 or change it to fit your life. The three numbers need to add up to 100%.
- See your monthly and yearly budget in pounds for needs, wants, and savings and debt.
- Compare it with what you actually spend. Go through last month’s bank statement and put each payment into one of the three pots.
How the 50/30/20 rule works
The 50/30/20 rule splits your take home pay into three pots:
- 50% needs: things you’d have to pay even in a bad month. Rent or mortgage, bills, council tax, food shopping, getting to work and minimum debt payments.
- 30% wants: the nice to haves. Eating out, takeaways, subscriptions, hobbies, holidays and clothes you don’t strictly need.
- 20% savings and debt: your emergency fund, investing, pension top ups and paying off debt faster than the minimum.
It’s popular because it’s simple. You don’t have to track every pound, you just keep each pot within its limit. The calculator multiplies your pay by each percentage and shows you the amounts.
Worked example: a £35,000 salary
Someone in England on £35,000, paying 5% into a pension, takes home £2,276.63 a month (straight from my take home pay calculator). Put that in at 50/30/20 and you get:
| Monthly | Yearly | |
|---|---|---|
| Needs (50%) | £1,138 | £13,660 |
| Wants (30%) | £683 | £8,196 |
| Savings and debt (20%) | £455 | £5,464 |
If rent and bills take more than £1,138, don’t panic. Try 60/20/20: needs go up to £1,366, wants drop to £455, and savings stay at £455. Trim wants before you touch savings.
Keep the savings pot going even when it’s small. £455 a month is £5,464 a year, which builds a solid emergency fund fast.
Why budgeting matters
Budgeting is the first thing I tell everyone to do. In my twenties I built up £24,000 of debt, and the turning point was finally knowing where my money was going.
A budget helps you save, invest, set goals, get ready for emergencies and plan for retirement. It also shines a light on the bad habits: the subscriptions you forgot about and the takeaways that quietly add up.
It doesn’t mean never treating yourself. Wants get 30% for a reason. Finding a few small savings can be the difference between a family holiday, a house deposit or, if you’re thinking big, financial freedom. If you share bills, my tips for a simple household budget will help.
Other budgeting methods
- Pay yourself first: on payday, move your savings out before you spend anything. Whatever’s left is yours to spend, guilt free.
- Zero based budget: give every pound of income a job (bills, savings, debt, spending) until there’s nothing left unassigned. Great if you like detail.
You can mix and match. Plenty of people use 50/30/20 as the rough shape, then pay themselves first so the 20% happens automatically.
Budgeting tips I use every month
- Automate your savings. A standing order on payday means saving happens without you thinking about it.
- Track your spending with a budgeting app or a spreadsheet. Seeing it is half the battle.
- Review your subscriptions every few months and cancel the ones you don’t use.
- Set specific goals. “Save £3,000 for a holiday by June” beats “save more”.
- Plan your meals to cut food waste and the pull of a takeaway.
- Budget for occasions. Birthdays and Christmas aren’t surprises. I’ve worked out what’s typical to spend on a birthday present if you want to size your own pot.
Not sure where to start?
Pick your goal (debt free, start investing, side income, saving for something big) and get a free money plan you can level up on. Takes about two minutes.
Get your free money planWhat to do next
- Best budgeting apps UK, or the best budgeting apps for students.
- How to save money and not spend it and my money saving tips.
- Ten ways to budget for a holiday.
- All my saving guides in one place.
- Compound interest calculator: see what your 20% could grow into.
Budgeting FAQs
What is the 50/30/20 rule?
A simple way to budget: 50% of your take home pay on needs, 30% on wants and 20% on savings and paying off debt.
Should I use my gross or take home pay?
Take home pay, after tax, National Insurance, student loan and any pension taken from your payslip. That’s the money you actually have to split.
What if my needs are more than 50%?
That’s common, especially with high rents. Shift the split (60/20/20 or even 70/10/20) and take it from wants first. Try to keep something going into savings, even if it’s small.
Where do debt payments go?
Minimum payments are a need. Anything extra you pay to clear debt faster comes out of the savings and debt pot.
Do pension contributions count as savings?
If they come out of your payslip, they’re already gone before your take home pay, so they’re not in this budget. Anything extra you pay into a pension or ISA yourself counts towards the 20%.