The 60/20/20 budgeting framework is simple: 60% of your after-tax income is allocated for monthly living expenses—essentials like rent or mortgage, groceries, utilities, and transportation. Balancing your financial life becomes more manageable because this portion covers your needs. The remaining 40% is split evenly, with 20% going towards savings, which may include emergency funds, retirement, or debt repayment, and the other 20% is reserved for personal wants—non-essentials like dining out, hobbies, and entertainment.