50/15/5: a saving and spending rule of thumb

Budget. Does anyone (read more) like that word? How about this instead—the 50/15/5 rule? It’s our simple rule of thumb for saving and spending: allocating no more than 50% of take-home pay to essential expenses, 15% of pretax income to retirement savings, and 5% of take-home pay to short-term savings. (Your situation may be different, but you can use our rule of thumb as a starting point.)