The 50/30/20 Rule Is A Common Budgeting Benchmark – But Is It Truly Accessible For All?

United States Senator Elizabeth Warren and her daughter, Amelia Warren Tyagi, introduced the 50/30/20 rule in the 2005 book they co-authored, "All Your Worth: The Ultimate Lifetime Money Plan." According to Warren and Tyagi, the rule is simple: allocate your after-tax income into three categories, 50% on needs, 30% on wants, and 20% on savings. It quickly caught on like wildfire.


"Most people don't like to make or keep a budget. The 50/30/20 budgeting plan is meant to fix that problem," personal finance expert Hanna Horvath told GOBankingRates in 2019 about the mother-daughter duo's approach to money management. "Plenty of budgeting tactics focus on making drastic cuts to save money, but the 50/30/20 plan stresses balance. It serves as a straightforward guideline on how you split up your money. If you're looking for a more hands-off approach to budgeting, the 50/30/20 budget rule may be best for you."

Alas, not everyone is a fan of Warren and Tyagi's plan. Many argue that the system isn't truly accessible, and like most financial concepts, that's probably true. 

Not everyone can afford to live on half of their income

The whole notion that one could live on only half of their income is great and all, but is it feasible? Not for everyone — especially not for low-income adults and families. "As prices continue to go up while incomes stay the same, a shift from the popular 50/30/20 budget is basically inescapable. While people have a really hard time budgeting any amount for their wants, it is becoming harder and harder to even consider savings or investments," Pricer CEO Alec Pow told GOBankingRates in 2022. And when those lower incomes are coupled with the high cost of living in more and more areas, it becomes downright impossible. "A recent poll we conducted with our visitor base concluded that most people are nowadays spending upward of 70% of their whole income on basic necessities, which leaves a very small percent to be split between debt, investments, and unnecessary expenses." Simply put, the math ain't mathin'. 


But low incomes and inflation aren't the only reason many find the 50/30/20 rule to be out of reach.

Student loan debt makes the 50/30/20 rule tricky

Student loan borrowers, beware; As outlined in Elizabeth Warren's 50/30/20 rule, student loan repayment fits into that "needs" category. Alas, the idea that someone could designate only half of their entire income to cover their living expenses and student loan debt is a tall order.


According to personal finance writer Kara Perez, trying to adhere to the 50/30/20 rule while being underemployed and facing high student loan debt simply didn't work for her. "I needed to cut my spending and increase my income. After all, there's only so much budgeting you can do on $900 a month," she penned in an article for InvestorJunkie. Sadly, not everyone can just snap their fingers and find a job making more money. 

It should be noted, however, that Warren has been very supportive of President Biden's student debt relief plan. "These are the people who have been scratching it out at state schools and historically black colleges and universities. They have had to borrow money to get there. They have had to borrow money to stay there. And they have had the hardest time paying off their debts on the other side," she said during an appearance on MSNBC's "Alex Wagner Tonight." Perhaps in a perfect world, the 50/30/20 rule would be accessible to all because individuals wouldn't be swimming in student loan debt. TBD, we suppose.