Updated 12 July 2021
The 50/30/20 budget is designed to separate your after-tax income into three buckets to prevent you from going into debt. After every payday, the theory is you allocate 50% for needs (such as food, housing costs, electricity etc), 30% on wants (meals out, tickets to sporting events, holidays etc) and 20% on savings and paying off non-housing debts (like credit cards and car finance etc).
50/30/20 Budget Calculator Instructions:
- Enter in your monthly income, after-tax and any deductions (student loan, KiwiSaver, ACC levy etc.) to find your 50/30/20 allocation.
- To manage your allocations, we suggest reading our Barefoot Investor New Zealand guide.
The 50/30/20 budget is a useful guideline to help you develop strong savings habits, but many people deviate from the exact percentages. Our view is that 50/30/20 is more of a goal than an absolute rule. Even if you allocate 10% of your take home pay to savings and debt repayment, the rewards can be significant. The 50/30/20 budget is designed to stop you accumulating new debt (my having a 'wants' spending limit) and pay off the debts you have.