Split your take-home pay into needs, wants and savings with no complicated spreadsheets.
The 50/30/20 rule allocates 50% of after-tax income to needs, 30% to wants, and 20% to savings or debt repayment. It works because the percentages scale automatically with your income.
Needs are unavoidable expenses: rent or mortgage, groceries, utilities, transport to work, insurance, and minimum loan repayments. If needs exceed 50%, look at reducing fixed costs or increasing income.
Wants are things you could live without: dining out, subscriptions, entertainment, clothing beyond the basics. The 30% bucket gives you a clear ceiling so spending does not creep unchecked.
The final 20% goes to your financial future: KiwiSaver top-ups, an emergency fund, investing, or paying down high-interest debt. Automate this transfer on payday and it becomes effortless.
If Auckland or Wellington rent genuinely takes more than 50% of take-home pay, adjust the split to 60/20/20 and focus on increasing income over time. The rule is a guide, not a law.
Put these ideas to work with our free budgeting calculators — no sign-up required.
Open MrBudgetingIt works at any income level. Start with even 5% toward savings if 20% is not yet achievable.
Yes — employee KiwiSaver contributions count toward the 20% savings bucket.
Adjust to 60/20/20 and focus on growing income or reducing housing costs over time.
Calculate your average monthly income over 3-6 months and use that as your base.