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If you have a large amount of debt that you need to pay off, you can modify your percentage-based budget and follow the 60/20/20 rule. Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.

The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.

Examples of using the 50-20-30 rule Emily makes $1,595 per month after tax. She can spend 50% of her budget ($797.50) on essential items, 20% of her budget ($319) on paying off her student loans and 30% of her budget ($478.50) on entertainment.

The 50/30/20 plan prioritizes savings and debt reduction, but the breakdown of savings or debt payments will depend on your personal circumstances. Savings can include retirement contributions, an emergency fund, or a goal like homeownership or travel.

Unfortunately, the 50/30/20 rule won't work for everyone because of individual circumstances, such as residing in an area where the cost of living is high. Keep in mind, though, that you can adjust the rule for your particular needs by changing the percentages to match your personal situation and financial goals.

40% of your income goes towards your savings. 30% of your income goes towards necessary expenses (food, rent, bills, etc.). 20% of your income goes towards discretionary spending (entertainment, travel, etc.). 10% of your income goes towards contributory activities (donations, charity, tithe, etc.).

The 50/20/30 rule can work well for consumers wishing to simplify the budgeting process and to ensure they're putting some of their money into savings. Though it might need to be modified for lower- or higher-income individuals, it can provide a basic framework for getting household finances on track.