How Much of Your Income Can You Spend on Non-Essentials?

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It’s good to know how much you can spend on the things you want rather than need. 

If you want to raise someone’s hackles, tell them how to spend, donate, or invest their money. Sure, we all want guidance, but few of us are open to obeying a total stranger. For that reason, we’ll refrain from telling you exactly how much you should spend on non-essential items each month. After all, much of it depends on your personal financial situation, the cost of living in your area, and your financial goals.

What we’d like to do instead is introduce you to a budgeting method that clearly spells out how much it’s safe to spend on the things you want rather than need. Take a look and see if it feels like a good fit for you.

The 50/30/20 rule

In 2025, U.S. Sen. Elizabeth Warren and her daughter, Amelia Warren Tyagi, wrote a book called All Your Worth: The Ultimate Lifetime Money Plan. It makes sense that the two decided to collaborate on such a book. Tyagi has an MBA from the Wharton School at the University of Pennsylvania and Warren has long advocated for financial independence.

It’s not quite clear if the two actually came up with this rule or if they simply helped popularize it. In either case, the 50/30/20 rule can simplify your financial life.

How it works

The 50/30/20 rule is all about balancing your needs, wants, and savings goals. It begins by dividing your after-tax income into three categories:

50% goes toward needs30% goes toward wants20% goes toward savings or paying off debt

A real world example

Jesse brings home $5,000 per month. By using the 50/30/20 rule, their budget would look like this:

$2,500 (50%) would be dedicated to paying rent, a car payment, credit card, and all other monthly obligations.$1,500 (30%) would be spent on “wants,” like going out with friends, buying clothes, and donating to their local ASPCA. In other words, they could use this money as they see fit.$1,000 (20%) would be earmarked for paying off existing debts and saving.

Because Jesse doesn’t have enough money in their emergency savings account, they decide to split the $1,000 in half and put $500 per month into savings and $500 per month (on top of the monthly payment they’re already making) toward paying off debt.

Your mileage may vary

Let’s say you’re carrying high-interest debt and want to get rid of it as soon as possible. For you, taking money from the “wants” category makes sense. So, if like Jesse, you’re bringing home $5,000 a month, you might only use $1,000 for non-essential expenses and dedicate the remaining $500 to paying your debt down at a faster clip.

On the other hand, let’s say you’re someone who carries little to no debt, lives in an area with a low cost of living, and is maxing out your retirement account at work. Tweaking the percentages to better match your circumstances can help you stay on track.

It’s not etched in stone

One important thing to remember about the 50/30/20 rule is that it’s not etched in stone. What works perfectly for one person may not be quite right for another. The beauty of such a simple budgeting system is the way it provides you with consistent direction for your money.

Begin by breaking your budget down into needs, wants, and savings and/or paying off debt. Even if your percentages end up being 60/20/20 or 40/30/30, the rule helps you set goals and stick with them in the simplest way possible.

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