50/30/20 budget calculator, 2026/27

How this is calculated

The 50/30/20 rule allocates roughly half of net income to needs such as housing, utilities and minimum debt payments, 30% to discretionary wants such as eating out and entertainment, and 20% to savings or extra debt repayment. This calculator simply applies whatever percentages you set to the monthly take-home figure entered, with savings automatically absorbing the remainder.

It is a budgeting guideline rather than a tax calculation, so there are no statutory rates involved; the only inputs are the split percentages and your own net pay figure.

Applying this as a director

Director income is often a mix of a modest monthly salary and periodic dividends, which makes a single steady monthly budget harder to plan than for someone on a fixed salary. Many directors find it useful to apply this split to an average monthly drawing figure, smoothing dividends across the year, rather than to whatever happens to be drawn in any single month.

Building a savings or tax buffer into the '20%' category is particularly important for directors, since personal tax on dividends and any self-assessment balance is not deducted automatically the way PAYE tax is from an employee's salary.

Adjusting the split

The 50/30/20 split is only a starting point. Someone with a mortgage-free home and low fixed costs might comfortably push more towards savings, while someone with high housing costs in an expensive city may need to allocate closer to 60% or 70% to needs.

Revisiting the split periodically, particularly after a change in income or a big fixed cost such as a new mortgage, keeps the budget realistic rather than aspirational.

What counts as a 'need' versus a 'want'?

Needs are costs you cannot reasonably avoid, such as rent or mortgage, utilities, groceries and minimum debt payments. Wants are discretionary, such as dining out, subscriptions and holidays. The distinction is judgement-based, not a fixed HMRC or accounting classification.

Should I use gross or net income for this?

Net take-home pay, since that is what actually lands in your account to be allocated. For director income this should reflect salary after tax and NI plus dividends after any tax you have set aside.

Does this work for irregular director income?

It works best applied to an averaged monthly figure. If your dividends are lumpy, consider smoothing them across the year, or run the calculator separately for a 'salary only' month and a month that includes a dividend.

Should tax I owe on dividends come out of the 'savings' category?

Ideally you should set aside dividend tax and any self-assessment liability separately before applying this split, since it is a liability rather than genuine discretionary saving.