Quick answer: On 15,000 a month after tax, the 50/30/20 rule gives 7,500 for needs, 4,500 for wants and 3,000 for savings and debt repayment – 36,000 saved a year.
How it's calculated
The 50/30/20 rule, from the book All Your Worth by Elizabeth Warren and Amelia Warren Tyagi, puts 50% of after-tax income towards needs, 30% towards wants and 20% towards savings and paying down debt.
Needs are what you must pay: rent or housing payments, utilities, groceries, transport, insurance, school fees and minimum loan payments. Wants are choices: eating out, travel, subscriptions, shopping. Savings include an emergency fund, investments and extra debt repayment.
In Gulf cities rent alone can take a large share, so needs may exceed 50%; adjust the shares, keeping savings as high as you can. To plan towards a target, use the savings calculator.
Worked examples
- 15,000 a month, 50/30/20: 7,500 / 4,500 / 3,000
- 20,000 a month, 60/20/20: 12,000 / 4,000 / 4,000
Frequently asked questions
Is income before or after tax?
After tax and social insurance: what reaches your account. In Saudi Arabia and the UAE that is usually your salary minus GOSI or pension contributions.
Where does debt repayment go?
Minimum payments are needs; anything extra you pay to clear debt sooner counts in the 20%.
What if my needs are more than 50%?
Set the shares to your reality, for example 60/20/20, and look for ways to lower fixed costs over time, such as rent or car payments.
How big should my emergency fund be?
A common target is 3 to 6 months of essential costs. Build it from the savings share before you invest.
Where do money transfers to family go?
If your family relies on them, count them as needs. If they are optional gifts, count them as wants. Be consistent, so the split stays useful.
Can I change the 50/30/20 split?
Yes. It is a starting guide. With high rent you might need more for needs for a time, and with a big goal you might save more.