What is the 50 30 20 rule for budgeting?

The 50/30/20 rule is a simple budgeting framework where you divide your after-tax income into three categories. 50% goes toward needs, which are essential expenses like rent, groceries, utilities, and transportation. 30% goes toward wants, meaning non-essential spending like dining out, entertainment, subscriptions, and hobbies. The remaining 20% goes toward savings and debt repayment, covering things like an emergency fund, retirement contributions, and paying down loans. The rule was popularized by Senator Elizabeth Warren in her book "All Your Worth." It's meant to be a flexible guideline rather than a strict rule, so you can adjust the percentages based on your personal financial situation, cost of living, or specific goals.