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50/30/20: Budgeting for people who think budgeting sucks

Budgeting is hard, and we are the first to admit that managing money presents a unique challenge. Managing the numbers is (relatively) easy, but managing our very human wants, needs, and goals can be really hard, and balancing the lot can feel impossible.

This is why rigid, granular budgets don’t really work for us. If we overspend on wine (let’s be real lmao), we don’t want to feel like trash, we just want a plan to move forward, better.

Thankfully, our better budget is a simple one. Meet the 50/30/20 Rule.

Budgeting, But Make It Not Scary

Most often, folks gravitate towards granular budgets which make use of specific values. This month, for example, one might spend $104.68 on one’s phone bill, $1,500 on rent, and $20 on wine (all of these figures are absurd for different reasons). But, when—not if—you overspend on something, the budget breaks. Your spreadsheet starts flashing red and your laptop threatens to self-destruct like in those Tom Cruise movies he’s still making for some reason. You went over budget! You are garbage and not an adult! You have no self control!

But none of that is true. This is why we love the 50/30/20 Rule: it’s a ratio-based budget. And it’s flexible. Hear us out.

The breakdown is simple: 50% of your net income goes to your needs. These include things like:

  • Rent (too expensive)
  • Phone Bill (also too expensive)
  • Food (delicious)

These are the things you need in order to be an alive, functioning, healthy human. Then, there are your wants, which get 30% of your net income. These include:

  • Gettin' yer nails did (shiny)
  • Tamagotchis (classic)
  • PS5 (for everyone)
  • Funko pops (weird)

Lastly, your goals get the final 20% of your net income. These are personal financial goals, and might include:

  • Paying down debt (very cool, power move, do this first)
  • Saving a down payment (Big Adult Energy)
  • Growing your retirement fund (Bigger Adult Energy)

That’s 50 + 30 + 20 = 100% of your income spoken for and allocated. But 50/30/20 budgets aren’t always feasible for everyone—not right away.

Logical, Flexible Budgets For the Real World

While 50/30/20 is the Golden Ratio, in our perspective—it covers your needs, allows for some fun, and helps you prep for the future—this ratio might not work for everyone right away, and that’s okay.

Consider a new grad in an entry level position making $2,000 net a month (about $12 per hour before tax). Say rent is $1200 per month; for you, new grad, the cost of your needs may take up closer to 60% or 70% of your net income. This is because when we make less money, our fixed costs necessarily take up a greater amount of our net income (rent isn’t cheaper just because we make less, which is dumb!).

For this income level, the fixed costs of food and housing might skew your ratio closer to 70/15/15, or 70/10/20, depending on your goals. If you find yourself with a ratio skewed toward the cost of your needs, you have two options:

  • Make more money (simply make more)
  • Cut down on fixed “needs” costs

You can save money on your needs by making substantial lifestyle changes, including moving to somewhere with cheaper rent. This is lame, because you probably like where you live—but it’s one of the simplest ways to balance your budget more evenly between your needs and your wants/goals.

It’s not always easy to get to the 50/30/20 Rule, but using a ratio based budget helps maintain perspective on your finances while ensuring you consistently strive toward meeting your goals. After all, saving $5 per paycheque is better than saving nothing at all.

To get started with this budget, break down your own expenses into those three categories (Netflix is a want, not a need) and see what your own ratio looks like. Are you a 50/30/20, or more like a 70/15/15?

(You can read our in depth guide to 50/30/20 Budgeting here.)

Find Your Ratio and Set Your Sights

Depending on your personal financial circumstances, your ratio-based budget will look different, and that’s okay.

The best budget is the one you can stick to, and ratio based budgets bring flexibility to manage fluctuations month to month while maintaining perspective on your financial goals.

Things to keep in mind:

  • It’s much more difficult to reach financial goals without a good sense of how you spend your money
  • The point is not perfection, it’s progress. 70/15/15 this year could be 60/15/25 with a few strategic changes. The ratio best suited to your life is yours alone.
  • You are cool, you have your life together, you deserve nice things, and you can budget (!!!!!!!!!)

To put this budget into action, use our MogoCard for all your "wants" spending. It'll help you separate your spending money, so you can avoid dipping into your savings or relying on your credit card! Plus, it'll give you balance alerts so you can always stay on top of your transactions (while planting a tree with every purchase).

Let’s level up our money game, y’all!!!!


- Team Mogo

*Trademark of Visa International Service Association and used under licence by Peoples Trust Company. Mogo Visa Platinum Prepaid Card is issued by Peoples Trust Company pursuant to licence by Visa Int. and is subject to Terms and Conditions, visit for full details. Your MogoCard balance is not insured by the Canada Deposit Insurance Corporation (CDIC). MogoCard means the Mogo Visa Platinum Prepaid Card.

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