How much should you spend on subscriptions? A simple budget rule

The 50/30/20 rule in one minute

The 50/30/20 rule was popularised by Elizabeth Warren and Amelia Warren Tyagi in their 2005 book All Your Worth. It splits your take-home pay, the amount that actually lands in your account after tax, into three parts:

It’s a rule of thumb, not a law. If your rent alone is half your income, the split will look different. But it gives subscriptions a sensible home: they live in the wants part, next to everything else you enjoy.

Which subscriptions are needs and which are wants

• Usually needs: your phone plan, home internet, software you need to earn a living, a transport pass you use to get to work.
• Usually wants: streaming, music, gaming, most apps, news and magazine subscriptions, delivery memberships.
• Grey areas: the gym, cloud storage holding the family photos, a password manager. Decide once where they belong and stay consistent.

Being strict here matters. If every subscription counts as a need, the budget can never tell you to cut anything.

How to set your subscription cap

1. Find your monthly take-home pay. Use the net amount, not your salary before tax.
2. Work out your wants budget: take-home pay × 0.3.
3. Choose a share of it for subscriptions. About a sixth of the wants budget, roughly 5% of take-home pay, leaves plenty for everything else.
4. Work out your real total. This guide shows how, including the formulas for weekly and yearly plans.
5. Compare the two. The gap tells you how much to trim, or how much room you have.

A worked example

Notice that the fix didn’t need ten small cancellations. Two decisions about the biggest lines did the job, which is nearly always the case.

What to do if you’re over your cap

• Rank by cost per use. Divide each monthly price by how often you used it last month. The worst value goes first.
• Cancel the most expensive plan you used least. One big cancellation beats several small ones.
• Rotate instead of stacking. Keep one streaming service at a time and switch every few months.
• Downgrade tiers you don’t fully use, such as family plans for one person or premium tiers for casual use.
• Move daily habits to yearly billing where the discount is real. Here’s how to tell.

Keep personal, shared and work subscriptions apart

A single total can be misleading. If you pay the whole family streaming plan but others pay you back, only your share belongs in your budget. If your employer reimburses a tool, it doesn’t belong in your wants at all.

Keep three separate lists: one for your own subscriptions, one for shared household plans and one for work. Each gets its own total, and only the first counts against your personal cap. If you split shared plans with others, agree the split up front so your share is a known number.

Yearly plans belong in the monthly budget

A €59.99 yearly plan doesn’t cost nothing for eleven months and €59.99 in the twelfth. Count it as €5.00 every month. That way the renewal never breaks the month it lands in, and you see its real weight next to your monthly plans.

Check it every quarter

A budget you never look at is just a number. Once a quarter, compare your real total with your cap, and cut or pause whatever pushes you over. A 15-minute subscription audit is a good way to do it, and it catches price rises and forgotten trials at the same time.

Common mistakes

• Using your salary before tax instead of take-home pay.
• Counting yearly plans only in the month they charge.
• Counting the full price of shared plans when you only pay a share.
• Setting a cap so tight you’ll ignore it within a month.
• Never revisiting the cap when your income or your priorities change.

Where Billbase fits

Billbase shows your monthly and yearly total the moment you add your subscriptions, with yearly and weekly plans converted for you. With Pro you can keep personal, family and work subscriptions in separate workspaces, so each total means exactly one thing.

You can also ask Billy, the AI analyst in Pro, questions like “how much do I spend on streaming a month?” and see whether a category is eating your cap.