Budget Builder (50/30/20)

The 50/30/20 rule (where it comes from)

The framework was popularized by Elizabeth Warren, the U.S. senator and bankruptcy-law scholar, and her daughter Amelia Warren Tyagi in the 2005 book All Your Worth. It splits your after-tax take-home pay: needs = 50%, wants = 30%, savings + extra debt repayment = 20%. The 60-10-10-10-10 variant assigns 60% to essentials and four 10% slices (this tool groups them into 60% needs, 20% savings and 20% wants for the chart).

Custom splits normalize to 100%

With a custom framework the three percentages are normalized so they always sum to 100: share = slice ÷ (needs + wants + savings). You can set them in any ratio, for example 60/20/20 for a high-cost city, and the tool rescales automatically.

Targets and savings rate

Each target is take-home × share. Your savings rate is the savings share of take-home pay. The hero number is your monthly savings target under the framework.

Years to financial independence (a teaser)

Using the 4% rule, your FI number is 25 × annual spending. The rough years-to-FI shown here is FI number ÷ annual savings, savings only, before any investment growth, so it is deliberately pessimistic. At a 20% savings rate it is always about 100 years regardless of income, because you save 20 and spend 80 (25 × 80 ÷ 20 = 100). Only the savings rate changes that number. For a proper projection with market returns, CPP and OAS, use the FIRE calculator.

Savings rate chart: cash alone vs invested

The dashed line is the card's formula at every savings rate s: years = 25 × (1 − s) ÷ s, so 20% gives 100 years and 50% gives 25. The solid line invests each month's savings at a steady after-inflation return r, starting from $0, until the pot reaches 25 times a year's spending: months = ln(1 + 300 × i × (1 − s) ÷ s) ÷ ln(1 + i), where i = (1 + r)^(1/12) − 1 is the monthly return and 300 is 25 years of monthly spending. Income cancels out of both formulas, so only the savings rate matters. The return is r = (1 + nominal return) ÷ (1 + inflation) − 1, using the FP Canada Projection Assumption Guidelines figure for a balanced 60/40 portfolio: 5.2% a year before fees, deflated by 2.1% inflation, gives about 3.0% (figures as of July 2026). Working in after-inflation dollars keeps your spending and FI number in today's money. The green gap between the lines is the time growth saves. Both lines stop at 100 years: the top of the axis reads 100+, because a line held there means 100 years or more, and the tooltip reads "over 100 yrs" at those points.

Assumptions: you start from nothing, save the same share of take-home every month and earn the same return every year. That makes it one steady path, not a range of outcomes: real returns vary from year to year, so a real date would too. Fees would lengthen the invested path. Under 50/30/20 part of the savings slice is extra debt repayment, which is not invested. The 25× multiple is the 4% rule, which comes from U.S. market history. The FIRE calculator lets you change the return, the withdrawal rate and your starting savings.

Target vs actual meters

Each meter's bar is what you actually spend in that bucket and the tick is its target (take-home × share). All three meters share one dollar scale, so equal amounts draw equal lengths. Needs and wants turn red past their tick. For savings the logic flips: what is left after spending should reach the goal, so the bar is gold below the goal and green at or above it. A shortfall cannot be drawn as a bar, so the savings meter states it in words.

Where your take-home goes

Once you enter spending, the allocation chart becomes a flow: take-home pay on the left, into needs, wants and what is left to save, then into your spending categories (any at $0 is left off). Take-home covers needs first, then wants. If you spend more than you take home, a red Shortfall stream supplies the rest, which in real life is new debt or money drawn from savings, so the flows always balance: take-home + shortfall = needs + wants + left to save.

Needs vs wants classification

When you enter actual spending, housing + transport + groceries is treated as needs and dining + subscriptions + other as wants. Whatever is left of your take-home pay after both is your implied actual savings. A bucket over its target is flagged.

The Canadian reality check

Average one-bedroom rent tops $2,000/month in Toronto and Vancouver, so housing alone can blow past 50% of take-home for many renters. That is a signal to adjust the framework, not to feel guilty. Protect the savings slice first (pay yourself first, automate a transfer on payday), then fit needs and wants to what is left.

What this doesn't model

Irregular income, annual or one-off expenses (insurance renewals, property tax), sinking funds, or the tax treatment of where you save. Convert a gross salary to take-home with the income tax calculator first, and plan the destination of your savings with the FIRE calculator.