What this does
Enter what lands in your account and where it goes. This totals each category, compares it with the common benchmark, and puts the surplus or the shortfall at the bottom where you cannot miss it.
Why this one
It treats 50/30/20 as a benchmark rather than a target. In most Canadian cities rent alone takes more than half of take-home, and a tool that responds to that by telling you to spend less on needs is not being useful. This shows you the gap and names the largest line, and leaves the judgement to you.
The formula
benchmark: needs 50%, wants 30%, saving and extra debt payments 20% of take-home
left over = take-home - everything allocated
emergency fund = essential monthly spending x 3 to 6 monthsPublished so you can check it. A calculator about money that will not show its working is asking to be trusted on the one thing you cannot verify.
Questions
- Is 50/30/20 a rule?
- No. It is a benchmark that gives you something to compare against. It was popularised in a country and a decade with different housing costs, and treating it as a target in a city where rent is 45% of take-home produces advice nobody can follow.
- What counts as a need?
- Anything you would still be paying if your income stopped tomorrow: housing, utilities, groceries, insurance, transport to work, minimum debt payments. The test is whether you can stop it this month, not whether it feels essential.
- Should the emergency fund be based on income or spending?
- Spending, and specifically essential spending. What has to be covered when income stops is the rent and the groceries, not the salary.