The 50/30/20 rule splits after-tax income into 50% needs, 30% wants, and 20% savings and debt.

On 3,000 take-home pay that is 1,500 for needs, 900 for wants, and 600 for saving or paying down debt.

It works because it is simple to remember and makes saving happen first, not last.

In high-cost cities, adjust to 60/20/20 or 70/20/10 but keep saving something every month.

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