The 50/30/20 Method

Hi friends,

Welcome to the first week of The Sum’s Guide to Budgeting.

Over the next four weeks, we will explore five systems of budgeting. Each has its pros and cons. Some systems might work better for you than others depending on your financial situation. We’ll give you key takeaways each week, plus links to more helpful information.

Today, we’re starting with the 50/30/20 method. You can also use this as the foundation for other budgets like the envelope system or the zero-based budget. Let’s get started.

Cortlynn Stark writes about money and finance for The Sum. She previously covered city hall and breaking news for The Kansas City Star. When she doesn’t have her cat, Nemo, on her shoulders, she enjoys playing soccer (when she’s not injured) and reading escapist fiction (she is always taking recommendations).

The 50/30/20 budget breaks your finances into three categories:
50% for necessities, 30% for wants and 20% for savings and debt repayment.

To get started, figure out your monthly income. Then, you’ll split that into each category and plan your budget around the categories. (You still need to track your spending every month.)

For example: Let’s say you make $3,000 each month.

Here’s how that breaks down.

There are tons of templates online you can use on everything from Google Sheets to Notion.

Here’s the Notion 50/30/20 template that I used!
To figure out your percentages, here’s a budget calculator from NerdWallet.

For further reading on the 50/30/20 budget, check out our sources.

That’s it for our first week. As you’re trying this method, let us know on Instagram or TikTok — we want to hear how it’s going or any challenges you have.