How it works
The 50/30/20 rule is a simple starting budget: about half of take-home pay for needs you can't avoid, under a third for wants, and at least a fifth for savings and paying down debt beyond the minimum.
Needs are rent or mortgage, utilities, groceries, transport, insurance and minimum loan payments. Wants are everything optional: eating out, holidays, subscriptions, hobbies. Savings include an emergency fund, retirement and investments.
If your needs are above 50% — common in expensive cities — shift the split, for example 60/20/20, and look for the biggest fixed costs you can cut.