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Although minimum repayments are considered needs, any extra repayments reduce your existing debt and future interest, so they are classified as savings.

How to apply the 50 30 20 rule: a step-by-step guide So, how do you actually use the 50 30 20 rule? Calculate your after-tax income The first step to using the 50 30 20 budgeting rule is to calculate your after-tax income.

If your paycheck automatically deducts payments such as health insurance or pension funds, add them back in. Now, split all your expenses into the three categories: needs, wants, and savings. A want is an additional luxury that you could live without, such as dining out.

Evaluate and adjust your spending to match the 50 30 20 rule Now that you can see how much of your money goes towards your needs, wants, and savings each month, you can start to adjust your budget to match the 50 30 20 rule.

The best way to do this is to assess how much you spend on your wants every month.

Nerdwallet and Moneyfit both offer online calculators that show you how much you should be putting towards your needs, wants, and savings each month, based on your after-tax income. Spreadsheet software such as Microsoft Excel, Google Sheets and Apple Numbers all offer pre-made spreadsheet templates to help make budgeting easy. Your money at N26 Budgeting can be a great way to feel more reassured and in control.