The 50/30/20 Rule on a Pakistani Salary

The 50/30/20 rule says you should spend about 50% of your take home pay on needs, 30% on wants, and put 20% towards saving or paying off debt. On a Pakistani salary it works as a starting guide, not a strict law, and you should adjust it when rent or family support is large.

What does the 50/30/20 rule mean?

It splits your monthly income into three buckets.

• Needs, 50%: things you cannot easily skip, such as rent, utilities, groceries, transport, school fees and minimum loan payments.
• Wants, 30%: things that make life nicer, such as eating out, shopping, subscriptions and trips.
• Savings and debt, 20%: money you set aside, plus any extra you pay on debt beyond the minimum.

The point is not precision. It is to give you a quick test: is most of my money going to things I chose, or things I had to pay?

What does it look like on Rs 60,000 a month?

These figures are an illustration, not a recommendation for any real household.

Take a salary of Rs 60,000 a month after deductions.

• Needs: Rs 30,000
• Wants: Rs 18,000
• Savings and debt: Rs 12,000

Rs 30,000 for needs has to cover rent or a share of it, electricity and gas, groceries, phone and internet, and transport. In many cities that is tight. If you live with family, it may be comfortable. The rule only tells you the target. Your own numbers tell you how far off you are.

What does it look like on Rs 120,000 a month?

Again, this is an illustrative example.

Take a salary of Rs 120,000 a month after deductions.

• Needs: Rs 60,000
• Wants: Rs 36,000
• Savings and debt: Rs 24,000

A higher income often brings a different problem. Needs stay roughly fixed, but wants grow quietly. Delivery orders, online shopping and subscriptions rise with income, and the 30% bucket fills faster than you expect. Rs 36,000 sounds like a lot until you add it up across a month.

What if rent or family support is large?

Many households in Pakistan support parents, siblings or extended family. That spending is real, and a rule built elsewhere may not fit. You have two honest options.

1. Treat family support as a need. If you send money home every month and it is not optional, count it in the 50%. Then your own needs have less room, and that is fine as long as you see it clearly.
2. Create a fourth line. Keep needs, wants and savings, and add “family” as its own bucket. A typical shift might be 50/20/10 with 20 going to family, but only if that matches your life.

If rent alone takes more than half of your income, you will not hit 50% on needs. In that case, protect a small saving first, even Rs 2,000 or Rs 5,000, and look for savings in the wants bucket instead. A smaller saving that happens every month beats a large one that never does.

How do you check your real split?

Most people guess their split and guess wrong. Your bank statement shows the real one. You can do it by hand or with a tool.

By hand

Download your statement, add a category beside each expense, then total the groups. Then move each category into needs or wants. Groceries, utilities and education usually go in needs. Food and dining, shopping and subscriptions usually go in wants. Charity and transfers depend on your situation.

With SpentStory

Upload your PDF statement and it sorts each expense into one of 13 categories, such as Groceries, Utilities, Food & Dining and Subscriptions. The dashboard shows a category breakdown, so you can see in a minute how much went where. You can change the category of any expense if you disagree. You can also try the bank statement analyzer to see the idea in action.

Keep in mind that SpentStory looks at expenses only. Money coming in, such as salary, is left out on purpose, so the picture is about where your money goes. You will need to compare the totals with your own take home pay.

Some payments never appear on a statement. If you pay in cash, add those by hand. Our guide on how to track cash expenses shows easy ways to do it.

What should you do with the result?

Compare your real numbers with the targets, then change one thing.

• If wants are above 30%, look at your biggest wants first. Often it is food delivery, so read how to cut food delivery spending.
• If needs are above 50%, check for bills you could lower, and for repeating charges you no longer use. Our guide to finding and cancelling forgotten subscriptions helps.
• If savings are below 20%, move a fixed amount on salary day, before you spend.

Do not aim to be perfect in the first month. Aim to see the real split, then move it a few points in the right direction each month.

If you want to know where your money goes before you decide on a target, Upload your first statement free. In a few minutes you will have your category breakdown ready to compare against 50/30/20.