50 30 20 Rule (Free Excel Budgeting Template)

If you’ve come searching for an easy-to-manage budgeting technique that keeps things simple yet effective, the 50 30 20 Rule is exactly what you are looking for.

50-30-20 Template

Get your budgeting template for free through email.



What are budgets?

A budget is defined as:

An estimated prediction of your income vs expenses over a defined period of time.

Your obvious goal in budgeting is to always keep your income greater than your expenses. Creating a monthly budget is a terrific money management technique to get and keep your finances on track throughout the year.

Who Should Use the 50/30/20 Rule?

The 50/30/20 Budgeting Method is best for those who wish to keep things simple. This budget can work well for college students, young professionals, and families alike.

It is a great introductory budgeting technique that gives guidance on how much to allocate toward different expenses throughout the month. If you’re brand new to budgeting or have tried a method too complicated for your tastes, this is the budget for you!

What we like about 50/30/20 Rule:

  • One of the simplest of all budgeting methods
  • Perfect for first-time budgeters
  • Budget easily highlights if any changes need to be made

Some drawbacks of 50/30/20 Rule:

  • Possibly not aggressive enough budget for paying down debt or racking up savings
  • Those living in ultra-high rent areas may find the budget a bit challenging
  • Higher earners may want to lower their 30% Wants category

50/30/20 Rule Breakdown

A budget plan using the 50/30/20 Rule of thumb breaks down your expenses into three separate categories:

Let’s do a quick analysis of those categories.

50% Needs

Needs are expenses that are vital to living. They include expenses that you cannot avoid on a monthly basis.

Needs should include:

Housing, Groceries, Basic Clothing, Healthcare, Transportation, Childcare, Minimum Debt Repayments (i.e. Credit Cards, Student Loans, Car Loans)

30% Wants

Wants are considered extra expenses that are not needed in order to live and work on a monthly basis. They are usually expenses that add to your quality of life, but aren’t deemed completely necessary.

Wants may include, but are not limited to:

Internet Plan, Cell Phone Plan, Monthly Subscriptions (i.e. Netflix, Amazon Prime, Costco), Vacations, Luxury Items (i.e. Clothes, Shoes,Jewelery),Dining Out, Entertainment, Travel

Unfortunately Wants are usually the starting place for budget problems!

20% Savings and Debt

The savings and debts category is meant for setting money aside for the future and paying off any loans or debts owed. 

Savings and Debts may include:

401(k), Traditional IRA, Roth IRA, Emergency Fund, CDs, Money Markets, All Debts beyond Minimum Payments: Credit Card, Student Loans, Car Payments


All debts have a minimum monthly payment to fulfill in order to not take a hit on your Credit Score. These minimum payments will go into the “Needs” category. All extra payments beyond the minimums will be classified into “Savings and Debts.”

Minimum Debt Example:

You have a $5000 credit card debt that has a $25 minimum payment. However, you are able to contribute an extra $125 per month toward the balance.

In this case, $25 would be added to the 50% Needs and $125 would go into the 20% Savings and Debts.

Still having trouble figuring out What Expenses to include in a Monthly Budget check out this post.

How to Create a Budget Using the 50/30/20 Rule

Step 1: Calculate Your Income

Your first step towards creating a monthly budget is to calculate your after-tax income. This is the money you receive as a paycheck each month after taxes and any deductions are removed.

Next, add back any paycheck deductions from the above value. This should include any retirement or healthcare plan deductions that are taken out each pay period.

The purpose of adding back your deductions is to track your total monthly income that you are working with. This is to ensure you are dividing up the total amount properly.

Once, you have this number, set it aside for later.

Commission or Seasonal Employees

Tip: Those who do not collect a steady paycheck every other week, like a standard 9-to-5 job, may have a more challenging time calculating income.

If you work off commission or have very seasonal work, make sure to take this into account when calculating your monthly income. 

A conservative average of your last 3-6 months income should give you a rough estimate. Those with more seasonal work can use their prior years’ tax returns to get a yearly average and then divide by 12 for your monthly income.

Step 2: Gather Your Expenses

Gather and review all your expenses for the prior month.

Plan on reviewing credit card statements, bank statements, ATM withdrawals, rent or mortgage payments, car insurance, health insurance, groceries, gas, memberships, online shopping, bar tabs, entertainment, retirement contributions, etc.


This most important part of a budgeting exercise is to be completely honest with yourself. Don’t hide or fail to include expenses, you are only hurting yourself!

Step 3: Categorize Your Expenses

Once you have all your expenses and their amounts recorded, the next step is separating your expenses up into the three categories.

Classify them using the information above into your Needs, Wants, Savings and Debts.

Step 4: Add It all Up

At this point you should have three categories with all your expenses split between them.

Add up each category to come up with totals for all three.

Step 5: Analyze and Compare

In Step 5 you will be comparing what you actually spent on Needs, Wants, Savings and Debts vs what you should have spent using the 50/30/20 Rule.

To Compare Your Actual Budget vs an Ideal 50/30/20 Budget:

Divide your total income calculated in Step 1 into dollar values of 50%, 30%, and 20%.

Compare these values verses what you actual spent in the three categories.

It sounds harder than it is. Follow along for a quick budget example.

50/30/20 Budget Example


After-Tax Income: $3260

Paycheck Deductions: $720 (401k and HSA)

Total Income: $3980

Ideal 50/30/20 Budget:

Needs 50% or $1990, Wants 30% or $1194, Savings & Debts 20% or $796

Calculate Needs

Rent $1100, Utilities $125, Groceries $275, Car Payment $160, Gas $115, Credit Card Debt Min. $25

Total: $1800

Calculate Wants

Cell Phone $85, Costco Mem. $5/mo, Internet $45, Amazon Prime $12, Netflix $9, Amazon Buys $150, Starbucks $80,Eating Out $300, Lake Weekend $275, New Clothes $165

Total: $1126

Calculate Savings and Debts

401(k) $450, Health Savings Account $270, Credit Card Debt Extra Payments $75

Total: $795

Compare Ideal Budget vs Actual Budget

50% Needs: Ideal $1990 vs. Actual $1800

Difference = $190

30% Wants: Ideal $1194 vs. Actual $1126

Difference = $68

20% Savings & Debts: Ideal $796 vs. Actual $795

Difference = $1

There is $259 left-over from your total monthly income.

A smart-money-play would be to use the cash to pay off high-interest debts such as Credit Cards! Read below for more suggestions.

Challenges of Budgeting

What happens if my Needs exceed 50%?

Having your needs exceed the 50% threshold is one of the harder problems to solve. Why? Because everything in this category should be expenses you can absolutely not live without. So how do you justify cutting something you can’t live without?

Every person has there own unique situation, but here are some suggestions for trimming your Needs:

  • Try to negotiate cheaper rent in return for work/tasks around the building
  • Start looking for a cheaper place to live
  • Refinance your mortgage
  • Rent a room in your house/look for a roommate
  • Reduce your grocery bill by eliminating waste and start meal planning
  • Sell your car for something more affordable
  • Buy a slightly used car that gets exceptional gas mileage
  • Use public transportation
  • Look for ways to earn more money: side hustle/part-time job

What happens if my Wants exceed 30%

It may hurt to hear this, but this may be your easiest problem to solve.

Start trimming expenses in your Wants category. Its that simple! Start with the items that mean the least to you and keep cutting until you are within your 30% limit.

What happens if my Savings and Debt contributions are below 20%?

If you find yourself not putting 20% of your income towards Savings and/or Debts, you could be setting yourself up for failure.

Try reducing your Wants until you can contribute at least 20% of your monthly income towards either savings or debts.

Some of the risks of failing to reach a 20% Savings and Debt payoff rate include:

  1. Out-of-control high-interest debt snowballs
  2. No savings for emergency situations
  3. Not enough money in retirement

What happens if I have a surplus at the end of the month?

Congrats, you really have a hang of this money-management thing! This is definitely a good “problem” to have.

What should you do with the extra money?

High-Interest Debt

Any surplus of money at the end of the month should go toward high-interest debt. Most likely this will be credit card balances. With credit card interest rates nearing 20% or more, it should be your primary target! Start aggressively paying your loans that have the highest interest rate first.

Emergency Fund

Next, start saving for an emergency fund. If the COVID-19 Pandemic didn’t convince you that an emergency fund is crazy-important, I’m not sure anything will. A good goal should be to have 3 to 6 months of income saved for any unforeseen events. Job lost, injuries, family problems, etc. I personally recommend the higher end of 6 months of saved income.

Retirement savings

Another good strategy is to contribute more toward your retirement plan. Retirement plans, like a 401(k), have yearly contribution limits, but most people don’t come close to maximizing them! If that seems too far out-of-reach, work toward contributing the minimum amount to receive a full company match from your employer-sponsored retirement plan.

Reward yourself

Lastly, spend a little more in the Wants category. You’ve obviously been managing your money well and it shows. Reward yourself with a little treat! Since this is a budgeting article, let’s not get too carried away with that treat!

How Do You Create a Spreadsheet for Budgeting?

One of the perks of using the 50 30 20 Rule is that creating a spreadsheet for expense tracking is extremely easy.

Whether you are trying to create budgeting templates in Excel, Google Sheets, or Numbers, you will find that the process remains quite simple.

  1. The basic concept is to create an input cell for your monthly Income.
  2. Next, create columns for Needs, Wants, Savings/Debts.
  3. Underneath those categories, there should be a cell for the name of the expense along with one for its dollar value.
  4. At the bottom of each category column, create a cell that adds up all the values.
  5. Lastly, compare your actual expenses to an ideal 50/30/30 Budget for your monthly income.

Or if this sounds way too complicated, Download our Free Budgeting Template for Excel.

Excel Template for Budgeting

Why go through the trouble of making your own spreadsheet when we have one all ready to go. Have the ready-made template for 50/30/20 budgeting in excel sent directly to your email! The template works best for Excel, it will work in other programs but some column adjustments may need to be done!

50-30-20 Template

Get your budgeting template for free through email.



3 thoughts on “50 30 20 Rule (Free Excel Budgeting Template)”

  1. Bonnie Branton

    Hello. I would love to have your 50-30-20 Budget Template emailed to me if possible.
    Thank you so much. This has been helpful.

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