This budgeting framework splits take-home income into three buckets: 50% for needs (rent, groceries, utilities, EMIs), 30% for wants (dining out, entertainment, shopping), and 20% for savings and investments.
It’s a starting template, not a strict law — someone with high rent in a metro city may need to flex the needs bucket to 60% and trim wants accordingly.
The real value of the rule is that it forces a minimum savings rate every month, rather than saving only whatever happens to be left over.
Formula
Needs = 50% of income · Wants = 30% · Savings/Investing = 20%Example.On a ₹60,000 monthly take-home, the rule suggests roughly ₹30,000 for needs, ₹18,000 for wants, and ₹12,000 directed to savings or SIPs.