How Much of Your Paycheck Should Go to Bills?

There’s no single right answer to how much of your paycheck should go to bills. Rent in one city can be double rent in another, so any fixed percentage will be too strict for some people and too loose for others. A better question is what share of your own pay goes to bills, and whether what’s left covers the rest of your month. You can work it out in about fifteen minutes.

Step 1: Start with take-home pay

Use the amount that actually lands in your account after taxes, insurance and retirement deductions. That’s the money your bills come out of.

If you’re paid every two weeks, multiply one paycheck by 26 and divide by 12 to get a monthly average. If you’re paid weekly, multiply by 52 and divide by 12. If your pay varies, average your last three months.

Step 2: Add up every bill

List everything you pay regularly to keep your home and life running:

• rent or mortgage
• utilities: electric, gas, water, trash
• internet and phone
• insurance: renters or homeowners, car, health if not deducted from pay
• car payment and other loan minimums
• subscriptions you’d keep in a tight month

For bills that aren’t monthly, use one-twelfth of the yearly cost. A $1,080 yearly car insurance premium is $90 a month.

The CFPB’s Your Money, Your Goals toolkit includes a spending tracker, which is a good way to make sure nothing is missing.

Step 3: Divide

Divide your monthly bills by your monthly take-home pay and multiply by 100. That’s your bills percentage.

A worked example, with made-up numbers:

	Monthly
Take-home pay ($1,500 biweekly × 26 ÷ 12)	$3,250
Rent	$1,350
Electric and gas	$140
Water and trash	$60
Internet and phone	$120
Car insurance ($1,080 ÷ 12)	$90
Car payment	$320
Subscriptions	$35
Bills total	$2,115

$2,115 divided by $3,250 is about 0.65, so bills take about 65% of this person’s pay, leaving $1,135 for food, gas, savings and everything else.

Step 4: Check what’s left

The percentage alone doesn’t tell you much. What matters is whether the money left after bills covers:

• groceries and household basics
• gas or transit to work
• savings, even a small amount
• debt payments above the minimums
• a little for yourself

If it fits, your bills are at a level your pay can carry. If it doesn’t, start with the bills, because they repeat every month.

About the 50/30/20 rule

You may have seen the 50/30/20 rule of thumb, which splits take-home pay into needs, wants and savings. It’s a handy starting point, but if your rent is high, needs alone can take more than half of your take-home pay. In the example above, bills take 65% before groceries. If that’s you, set your own target and focus on the money left over rather than the rule.

If bills take too much of your pay

Places to look first:

1. Bills you no longer use. Subscriptions and memberships on autopay are easy to forget. Our guide to finding and canceling subscriptions walks through it.
2. Utilities. Our guide to lowering utility bills covers practical cuts and where to get help.
3. Due dates. If money runs short before payday, moving due dates can help even when the total stays the same. See how to avoid late fees.
4. Fees. The CFPB warns that autopay can trigger overdraft or nonsufficient funds fees if your balance is too low, so keep an eye on your balance before each due date.

The CFPB’s toolkit also includes a cutting-expenses tool and a tool for prioritizing bills if you’re already behind. Our guide to what to pay first when you’re behind summarizes the priorities.

Build a cushion as you go

Once your bills fit your pay, start a small emergency fund. Washington State’s Department of Financial Institutions suggests a first goal of $500 to $1,000. Our emergency fund guide suggests a target based on your bills.

Keep the number current

Your bills percentage changes when rent goes up, a deal ends or your pay changes. Recalculate it whenever any of those happen. A bill tracker like Billo shows what’s due before payday and what’s left after bills once you add your pay and payday, so the number stays in front of you every month.

Summary

• There’s no single right percentage; work out your own.
• Use take-home pay and include one-twelfth of yearly bills.
• What’s left after bills is the real test.
• 50/30/20 is a starting point, not a rule you have to meet.

Want to see your own numbers? Try our free what’s left after bills calculator. It runs in your browser and nothing you type is saved or sent.