Best budget for beginners – the 50-30-20 method

Whenever I think of the best budget for beginners, I always think of the 50-30-20 budget.

Maybe I’m biased because it was my first budget when I graduated from college. But in all honesty, I think this method is a great one to start with no matter how old you are or what situation you’re in.

best budget for beginners

Best budget for beginners – the 50-30-20 method

I made a video on my Youtube channel about the 50-30-20 budget where I go over what it is, what I like about it, and even what I don’t like about it.

You can find out why I think the 50-30-20 method is the best budget for beginners below:

What is the 50-30-20 method?

The 50-30-20 budget suggests that you spend your money as follows:

  • 50% to your needs

    • Your needs are basically your expenses that you have to pay in order for your basic needs to be met.
    • For example:
      • Rent/mortgage payment
      • Minimum payments on your debt
      • Groceries
      • Electricity/utilities/water bills
  • 30% to your wants

    • This is exactly what it sounds like – you get 30% to spend on whatever you want!
    • For example:
      • Hobbies
      • Entertainment/going out
      • Eating out
  • 20% to savings

    • Your savings range from short-term to long-term. Basically, this amount is going towards taking care of the future you.
    • For example:
      • Emergency savings
      • Retirement contributions
      • Big purchases: car, house, etc.

Why is the 50-30-20 method the best budget for beginners?

So, why do I think the 50-30-20 method is the best budget for beginners?

  • It’s simple

    • When you’re putting together your very first budget, you want it to be simple. Anything complicated will just overwhelm you and make you want to give up on a budget entirely.
    • You only have to categorize your expenses into 3 categories: wants, needs, or savings. Again – this simplifies tracking your spending, which can be a daunting task in and of itself.
  • You have room for your ‘wants’

    • For some reason, the personal finance space gets a bad rap for telling others that you shouldn’t be spending on wants at all. This simply isn’t true – allowing yourself to spend on wants can keep you sane while you’re on a budget, making it a more sustainable change.
    • When beginners immediately cut out all fun spending, it can be helpful at first. However, in the long run, doing so can lead to resentment which might lead to uncontrollable spending later on. Allowing yourself to have room for wants in your budget allows you to put a cap on how much you can spend each month while still making progress on other parts of your finances.
  • The guidelines can serve as markers of your financial health

    • When categorizing your expenses into the three categories (needs, wants, savings), you can instantly see whether you’re doing well with your finances or not.
    • For instance, if your needs constantly fall at or below the 50% mark, you know you’re on the right track. However, if your needs are considerably above the 50% mark, you know you need to zone in on that category and make some changes.

Why is the 50-30-20 method not for everybody?

  • It may be too general

    • Yes, I mentioned its simplicity as a plus. But it might actually be too simple for some.
    • There are just some expenses that might not fit into a need, want, or savings category. Instead, you may want to get more specific with your spending categories.
  • Your goals don’t align with the 50-30-20 split

    • The 50-30-20 method is a great beginner’s budget, particularly to keep your finances in balance. However, if your finances aren’t balanced to begin with, the 50-30-20 split might not be ideal for the moment.
    • For example, 30% allocated to your wants might be way too much, especially if you’re deep in debt. Instead, you might want to lower your wants budget temporarily so you can throw extra money at your debt.

Even though it’s not a perfect method, I still think that the 50-30-20 budget is the best budget for beginners.

Have you ever done the 50-30-20 method before or are you doing it right now? What do you think of it?



  1. Steve from Arkansas May 1, 2017

    I’ve always given at least ten percent of my gross to my church which is fairly common practice in my faith. In that budget would you count that as a want or just take it off the top and budget the remainder?

    • Lisa E. May 1, 2017

      Hi Steve! Ultimately – it’s up to you! You can fit it in either the Needs or Wants categories.

      For a few years (before I was deep in debt), I actually did a modified version of the 50-30-20 as follows:
      40% – Needs
      30% – Wants
      20% – Savings
      10% – Tithing

      As you can see, I was doing more of a 40-30-20-10. Essentially, the tithing came out of the Needs budget. But again, its ultimately up to you! Also, I think it’s great that you’re tithing – I really hope to get back to it once I’m out of this debt 🙂

  2. YT @ raise-frequency April 30, 2017

    You are so organized with your finances. That is great, so many of us are not aware of how we are spending our money. Thank you for inspiring us to track our budget. It is useful to break it down in categories like you are showing us in this post, the percentages can be adjusted to personal situations
    YT @ raise-frequency recently posted…Raise your money manifestation power. Learn how to manifest money.My Profile

    • Lisa E. May 1, 2017

      Thanks! Glad this was helpful 🙂

  3. DC @ Young Adult Money April 28, 2017

    I think an important thing to keep in mind is how fixed expenses impact this. For example someone making $30k a year who has $500 in monthly student loan payments may need to increase their income through other means – or decrease their student loan payment through refinancing – to get under the 50% threshold for their needs. Overall it’s a nice guide to evaluate how your budget is working and where you can (need?) to make adjustments.
    DC @ Young Adult Money recently posted…15 Ways You Can Make Money From Your Computer Right NowMy Profile

    • Lisa E. April 29, 2017

      Good point – increasing your income is also an example of making the 50-30-20 work for you.

  4. Barnaby April 27, 2017

    I think simplicity is key – if something is too complicated, you are likely to rage quit. And I like how 50-30-20 has some room for pleasure. Again, if something is too strict, then you aren’t as likely to stick with it. Same with really tough diets I suppose.
    Barnaby recently posted…6 Splurging Lessons from Our ‘Hamilton the Musical’ ExperienceMy Profile

    • Lisa E. April 27, 2017

      “if something is too complicated, you are likely to rage quit” – YES! Totally agree!

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