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 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.

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.

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Last verified: 2 August 2026

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