Weird thing about the 50/30/20 budget

[J.Apple902]

50% needs
30% wants
20% savings

Boom roasted.

And this is done with take home pay I would expect?

Is anything else typically excluded from this? Rent? Debt?

How do you calculate 401k savings? It gets a little screwy because 401k contributions are made before you determine your take away pay.

I'm trying to post about personal budget in my blog but my numbers are weird. 401k contributions get lost if you calculate your budget 50/30/20 using takeaway.

Thanks!

[kork13]

All of that is why I find it much much easier to use gross income in all of my budgeting, not net income (take home, take away, etc.). It simplifies everything very much. You can include taxes, 401k contributions, and anything else you may have directly held from your take-home pay. Those things just become additional expenses to incorporate, which in reality you should WANT to do anyway.

And generally, I would say no -- if you are looking to use the 50/30/20 system (or any budget really), you don't want to exclude anything from it. All that ever does for you is paint an inaccurate picture, so you wind up really not understanding your true situation.

[J.Apple902]

I like what you're saying here. I think when dealing with budget and percentages I'll use gross income, and when tracking my spending month-to-month I'll use net income. It's mainly to follow my spending categories, find out where I can cut back if needed. Thanks!

Anyone have more thoughts?

[snshijuptr]

Does it really matter? Really just do what works for you. I do 50/30/20, but I do 30% savings. I also don't count any money taken out of our paychecks, including FSA money. I only use Net Income. And even then I round down our net income (I use the lowest our variable income ever is) so that there is a little extra money left at the end of the month that I usually use for other savings. I will also rollover any overspending in Needs into Wants.

I think the only thing I would say is that the 50% Wants should include rent/utilities since it is built with the assumption that 25% of pay going to rent/mortgage.

You might also ask how to budget for reimbursable expenses, one time special expenses, or annual expenses. THe 50/30/20 is just a starting point.