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20-30-50 Rule Calculator

Formula

The formula to calculate the 20-30-50 Rule is:

$B = \text{ATI} \times R$

Where:

B is the 20-30-50 Rule ($)
ATI is the after-tax income ($)
R is the budget rate (0.20, 0.30, 0.50)

What is the 20-30-50 Rule?

The 20-30-50 Rule is a budgeting guideline that suggests allocating 20% of your after-tax income to savings, 30% to discretionary spending, and 50% to necessities. This rule helps individuals manage their finances effectively by ensuring a balanced distribution of income.

Example Calculations

Example 1:

After-Tax Income (ATI): $4000

Calculation:

20%: $B = 4000 \times 0.20 = 800$
30%: $B = 4000 \times 0.30 = 1200$
50%: $B = 4000 \times 0.50 = 2000$

Example 2:

After-Tax Income (ATI): $5000

Calculation:

20%: $B = 5000 \times 0.20 = 1000$
30%: $B = 5000 \times 0.30 = 1500$
50%: $B = 5000 \times 0.50 = 2500$