"Don’t get me wrong, budgeting methods can be helpful tools for balancing grocery spending with coffee shop splurges. But if I am being honest, many of them leave me more frustrated than inspired. Not to mention, our once-trusted budgeting methods are feeling a little, well, old. Nowadays, incomes fluctuate more than ever, and prices are increasing for basically everything. Prioritizing anything except the essentials has never been harder. In times like these, investing in yourself and your future feels more like a fever dream than anything else. Luckily, there is one method in the budgeting world that prioritizes more than just the here and now, and its creator even claims it’s the secret to making future-you wealthier. Allow me to introduce the 50-20-20-10 method. Ahead, we’re sharing exactly what it is, what sets it apart from other budgeting frameworks, and how to use it to build more wealth.
turns out, you don't have to spend all of your free time cleaning
Maggie Sellers
Maggie Sellers is a media entrepreneur, investor, and the unapologetic voice behind Hot Smart Rich. With a background in high-growth startups and consumer venture capital, she’s built a platform that empowers ambitious women to embrace their ambition, beauty, and earning power. Through her podcast, investments, and viral content, she breaks down the playbook for building iconic brands and living a bold, intentional life.
What is the 50-20-20-10 method?
A more modern adaptation of the 50/30/20 rule, where you allocate 50% of your after-tax income to living expenses, 30% to personal expenses, and 20% to savings, this version allows for a couple of small but impactful tweaks that keep your best self in mind. With this method, you allocate 50% of your after-tax income to essentials, 20% to desires, 20% to savings, and most significantly, 10% to goals.
Maggie Sellers, the creator of this budgeting philosophy, believes that if you want to become “hotter, smarter, and richer,” you have to invest in your goals. This includes things like higher education or angel investing, which is what inspired her to create this method. Your goals in this category are things that will help increase your income in the long run. For example, you might want to save for online courses to make yourself desirable for higher-salaried roles. According to Sellers, these budgeting categories empower women to still enjoy things they desire, like avocado toast at brunch and a fresh set of nails, all while setting them up for increased financial security.
The 50-20-20-10 budget method groups your spending into big picture categories that feel a bit more adaptable to real life. This method makes sure you’re covered where it matters, while still prioritizing the important thing most budgets fail to do: helping you invest in your future.
What sets the 50-20-20-10 method apart?
The goals category is what makes this method stand out among its peers. Whether you want to go to law school or invest in a side hustle, this category helps you make your money-making goals an active priority. Many feel like they can’t afford to invest in themselves in this way, but Sellers says that “you have to spend money to make money.” By allocating a small portion of your income (in this case, 10% of your income) toward starting a side hustle, for example, you are setting yourself up to achieve this goal and benefit from it financially in the long run. Sellers encourages in a TikTok video that you don’t need to have a million dollars in your bank account to make goals like these happen—all it takes is a little at a time.
“This method makes sure you’re covered where it matters, while still prioritizing the important thing most budgeting rules fail to do: helping you invest in your future.”
The point of this category is to consider future-you. How can you set her up for success? What can make her even more money in the future? From there, determine your goals and outline the steps you need to get there. Sellers gives the example of having an ultimate goal of being an angel investor. First, you might need to save for tickets to a conference so you can learn more about it, or pay for a course to learn the ropes. You would allocate 10% of your income toward that first, so you can make your way toward your ultimate money-making goal. Overall, this rule turns the money you’re making now into even more money in the future.
Who should use the 50-20-20-10 method?
The 50-20-20-10 budget method is for anyone and everyone who wants to take a more modern-day approach to their finances. It is especially well-suited for ambitious, career-driven, or entrepreneurial women, or really, anyone who wants to enjoy their life now, all while building wealth. Whether you are just starting your first big girl job, trying to pay off student loan debt, or wanting to keep your financial future top of mind, this method offers a smart, realistic way to keep you grounded while prioritizing your growth and financial happiness.
How to implement the 50-20-20-10 method
1. Budget for your needs
Start by addressing the strong foundation that makes any good budget: your needs. Allocate 50% of your income to your non-negotiables: rent, utilities, mortgage, groceries, insurance, and debt repayments. This ensures that your most basic needs are met right off the bat, so you can move forward with allocating the rest of your money exactly how you want.
2. Automate your savings
As always, a certain percentage of your income should go into the piggie bank. Think about your savings goals. Do you want to increase your savings account by 15%? Do you want to prioritize your retirement fund? Set aside 20% for those things so you can consistently and confidently plan for the future. And while you’re at it, automate it, so you don’t have to think twice about this category.
3. Leave room for desires
Now that you have your needs and savings covered, it’s time for the fun stuff: your desires. Start to think about how your money can help you live your life to the fullest and allocate 20% toward those things. Maybe you love your workout studio membership or treating yourself to coffee once a week. This category allows you to do those things within your limits. Remember, enjoying your life is just as important as getting by.
4. Plan for your goals
Now, let’s get personal. What are your biggest goals for yourself, the future of your career, and the future of your bank accounts? What do you really want your money to do for you in the long run? Maybe you want to develop new skills from a design class, turn your hobbies into a side hustle, or sign up for a mentorship program—all things that could help make you more financially secure. Determine how much these goals cost, and allocate 10% of your income toward them each month. This way, you can start making your dreams a reality and seeing the long-term financial benefits from them.
Madigan Will, Assistant Editor
As an Assistant Editor for The Everygirl, Madigan writes and edits content for every topic under the digital media sun. As the oldest of four siblings, she enjoys utilizing her big sister persona to connect and inspire readers—helping them discover new ways to maximize their everyday.