Budgeting Made Simple: Understanding the 50/30/20 Rule

What is the 50/30/20 Rule?

This rule helps you break down your income into three categories:

• 50% Needs – These are essentials like food, housing, transportation, and bills.
• 30% Wants – These are non-essentials, like dining out, hobbies, or streaming subscriptions.
• 20% Savings – This includes saving for emergencies, a new car, future goals, or retirement.

The idea is simple: by dividing your income this way, you create a sustainable balance between living your life and preparing for what’s ahead.

Why It’s a Great Starting Point

(Especially for Young Learners)

As part of our commitment to financial education, Franklin Savings Bank partners with Banzai to bring real-world budgeting lessons — like the 50/30/20 Rule — to local classrooms. It’s a tool that’s easy to teach, easy to remember, and helps kids start thinking critically about their money.

Students learn to:
• Identify the difference between needs and wants
• Set savings goals (short-term and long-term)
• Understand the value of an emergency fund
• See how even small savings can grow with interest over time

These are life lessons that set the stage for financial independence and security.

Make It Yours

The 50/30/20 Rule is a guideline — not a strict rule. If your needs take up more than 50% of your income, or you’re able to save more than 20%, that’s okay! The goal is to be mindful and intentional with your money.

Want to explore how your budget aligns with your goals? Check out the helpful financial calculators on our website. Whether you’re planning for a big purchase, tracking savings, or budgeting monthly expenses, these tools are a great place to start.

Share the Knowledge

In honor of Teach Children to Save Day, we encourage parents, teachers, and students to start the conversation. Whether it’s building a simple budget, setting a savings goal, or opening a savings account, every step counts.

Let’s build a future where financial literacy starts early and lasts a lifetime!