Is the 50/30/20 rule before or after-tax?

Okay, so the 50/30/20 rule… is it before or after tax? That’s a question I’ve definitely asked myself before!

Well, the thing is, the 50/30/20 rule is all about your after-tax income. Think about it – it wouldn’t really make sense to budget with money you don’t actually have yet, right? After the government gets their share, then you can divvy it up.

So, yeah, after taxes are taken out, you’re looking at allocating 50% of what’s left to your needs – things like rent, groceries, transportation…you know, the stuff you absolutely have to pay for. Then, 30% goes to those wants – the fun stuff! Maybe that’s eating out, a new video game, or that concert you’ve been dying to see. And finally, 20% should be going towards savings or paying off any debt. Student loans, credit cards…ugh, we all have ’em!

I remember when I first started using this rule. It felt so much easier than meticulously tracking every single penny. I mean, who has time for that? Instead of stressing over every coffee, I just made sure my spending generally fit within those categories. It’s not perfect, and some months I definitely go over on the “wants” (oops!), but it gives me a pretty good framework and helps me feel in control of my money. And honestly, isn’t that what we’re all striving for? Just a little bit of financial peace of mind?