The budget for people who hate budgets

The 50/30/20 budgeting method is one of the simplest ways to get your spending in check. No 100-line spreadsheets or major lifestyle changes required.

Here’s how it works: Take your total after-tax income each month, and divide it in half. That’s your essentials budget (50%). Take the rest, and divide it into personal spending (30%) and financial goals (20%).

That’s your 50/30/20 budget.

Let’s break it down:

50% essential spending

You’ll want to budget a maximum of 50% of your income for essentials.

Now, if you live in a big city and your rent is pricy, you might tweak this ratio. But 50% is generally a good rule of thumb when it comes to budgeting for things like utilities, groceries, medications, minimum debt payments and other essential spending.

If you add up all your essentials and it’s way over 50%, it’s time to reevaluate.

You might be wondering how you can cut back on these essential items, but trust us: It’s possible! Here are a few ideas:

  • Get better deals on your monthly bills. I suggest starting with your car insurance. I personally saved $800 this year by switching mine. A free website called Savvy will help you find the best rates — in just 30 seconds. All you have to do is connect your current insurance, then Savvy will search hundreds of insurers for a better price on the same coverage. It’ll even help you cancel your old policy and get you a refund from your current insurer. Best yet: This is totally free. If you find a better deal, you can switch right away and don’t have to wait for your next renewal or even your next payment
  • Start meal planning. Before you head to the grocery store this week, map out your meals and make a shopping list. This makes you more mindful of your purchases and will help you eliminate wasted food (and money).
  • Find discounts on your medications. If you have prescriptions, check with an app called GoodRx to see if you could get them cheaper with a coupon or from another pharmacy. Even if you have insurance, this could save you a little bit more each month.
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30% personal spending

Now for the fun stuff: Thai takeout, your Netflix subscription and dressing up a skeleton in your lawn for Halloween all fall under the personal spending category. It’s the things you want and love, but you don’t need.

The reason the 50/30/20 method works so well is because it still factors in fun spending without sending us on a guilt trip. So what if you ordered out twice this week? Just give your Amazon account a break for a few days to stay under your 30% mark.

If you want or need to trim down your personal spending budget even more, check out what you can get for free or how you can get money back:

  • Get a library card. You can rent real-life paper books, digital copies and so much more from your local library. For nothing! Which is obviously way less than buying books for your monthly book club.
  • Get cash back. There are so many ways to earn cash back on just about anything you buy. One of the easiest ways is with a cash-back credit or debit card. There are also a ton of apps out there, like Ibotta and Dosh, that automatically give you cash back when you buy from thousands of retailers. If you get really savvy, you can stack these deals!

20% your financial goals

The final section of the 50/30/20 method takes into account your goals. This is an important step toward improving your financial health. It’s only 20%, so it’s not super intimidating!

What you’ll need to focus on here are your investments, emergency savings and additional debt-reduction payments (anything above the minimum monthly payment).

If you’re struggling with credit card debt, here’s a tip: consolidate it. This could lower your interest rates, save you money and help you pay off your debt even faster. And a website called AmOne can help you with that.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne won’t make you stand in line or call your bank, either. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could help you pay off your debt years faster.

Simply add Capital One Shopping to your browser, and shop like normal. This free tool does the work for you.

Install Capital One Shopping

In conclusion…

Budgeting is tricky, but the 50/30/20 method gives you plenty of flexibility to help you stay on track.

And the ultimate key to sticking to your budget? Remember to prioritize — not sacrifice — your spending so you can still have a little fun with your money.

Kari Faber ( is a staff writer at The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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About the Author

The Penny Hoarder

The Penny Hoarder

Guest Writer

Founded in 2010, The Penny Hoarder is one of the nation’s largest personal finance websites. Its purpose is to help people take control of their personal finances and make smart money decisions by sharing actionable articles and resources on how to earn, save and manage money.

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