What is the 50/30/20 rule?

The 50/30/20 rule is a simple budgeting guideline that suggests allocating 50% of your after-tax income to needs (rent, groceries, utilities, transport, insurance, minimum debt payments), 30% to wants (dining out, entertainment, hobbies, subscriptions, shopping), and 20% to savings and debt repayment (emergency fund, extra super contributions, investments, paying down debt faster). It was popularised by US Senator Elizabeth Warren and is widely used in Australia as a starting framework for personal budgets.

How much should I save each month?

The 50/30/20 rule recommends saving at least 20% of your after-tax income. For someone earning $70,000 after tax, that's about $1,167 per month. This 20% should cover your emergency fund (aim for 3-6 months of expenses), extra superannuation contributions, investments, and accelerated debt repayment. If you're just starting out, even 10% is a good beginning — the key is consistency and gradually increasing your savings rate over time.

Budget Planner

Q: How do I budget in Australia?

Start by calculating your after-tax (take-home) pay. Then use the 50/30/20 rule as a baseline: allocate 50% to essential needs, 30% to lifestyle wants, and 20% to savings. Track your spending for a month to see where your money actually goes, then adjust. In high-cost cities like Sydney, you may need to allocate more than 50% to needs — that's okay, just reduce wants accordingly. Use tools like this budget planner to set clear dollar targets for each category.

Plan your budget using the 50/30/20 rule. Enter your take-home pay and see exactly how much to spend on needs, wants, and savings each week, fortnight, and month.

Last verified: 1 July 2025

How do I budget in Australia using the 50/30/20 rule?

Split your after-tax income into 50% needs (rent, groceries, utilities, transport, insurance, minimum debt payments), 30% wants (dining, entertainment, hobbies, subscriptions) and 20% savings and extra debt repayment (emergency fund, super top-ups, investments). Sydney and Melbourne renters often need 55-60% on needs — trim wants to stay balanced. Source: ASIC MoneySmart, ABS Household Expenditure Survey.

Worked example. Take-home pay $70,000/year (~$2,692/fortnight). 50/30/20 splits into $1,346 needs, $808 wants and $538 savings per fortnight. That's $14,000/year saved — enough to build a 3-month emergency fund ($17,500) within 15 months, then redirect to investing or extra super contributions.

General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

From the Mate Network

Calculate Your Take Home Pay →

Not sure of your after-tax income? Calculate it first, then come back to budget it.

Check Government Benefits You May Be Entitled To →

Struggling to make ends meet? See if you qualify for Centrelink payments or rent assistance.

Budget Planner

How do I budget in Australia using the 50/30/20 rule?

Fixed monthly commitments (optional)

Related reading

Related Tools

From the Mate Network