These days, Elizabeth Warren is known as a Democratic presidential hopeful with detailed policy proposals and a take-no-prisoners attitude toward standing up for the little guy. But back before she got into politics, Warren had a whole other career as a Harvard law professor and co-author of personal finance books.

Lifehacker's Alicia Adamczyk recently delved into one of these titles and came up with some of the simplest and best budgeting advice you'll ever get.


Whatever you think of Warren's current proposals to break up big tech and cut the cost of child care, you can't complain that her financial advice back in the day was too complicated or dreamy. In fact, her budget guidelines boil down to all of three numbers.

Warren's 2006 title All Your Worth, co-written with her daughter, offers pretty standard financial advice, except for one fact, Adamczyk points out: "What's so special about it is that it's this book that pioneered the '50/30/20' budgeting system you see promoted by many financial experts these days." 

The book insists mastering your budget isn't about lots of details, but instead focusing on this three-number formula.

"A lot of budgeting starts at the edges and works in 'cut back here' and 'trim over there.' That's a little like planning a diet by saying 'cut out cookies' and 'no sugar in your coffee.' This approach may (or may not) work for slight modifications, but it is not a comprehensive lifetime plan. And if you don't have a master plan, then trimming a few expenses in one place while you overspend elsewhere won't do you any more good than cutting out doughnuts while you gorge on cupcakes," write Warren and her daughter.

Instead of complicated lists and time-consuming spending diaries, the book suggests you live by just three numbers: Spend 50 percent of your income on necessities like housing and food, 30 percent on optional fun stuff, and sock away 20 percent in savings.

Sure, it's a stretch, but it's doable 

You're first reaction to this might be, is she insane? With the price of housing, education, and health care skyrocketing, coming anywhere close to Warren's guidelines might sound like a fantasy to you. But, in the book, she insists that at least approaching this ratio isn't just doable, it's actually hugely liberating.

If you get your "must haves" down to (or at least near) 50 percent, then if you run into trouble like a layoff, an accident, or even a career opportunity that will temporarily reduce your income, you will have more room to maneuver. "A spending cap can sound so dreary, full of denial and no-no-no," Warren and her daughter write. "But this cap is all about liberation, not deprivation."

As Adamczyk explains, the book goes on to offer lots of advice to get yourself a lot closer to these ideal proportions -- from ditching all-or-nothing thinking to resisting the reductive charms of too easy credit. Check out her article, or the book itself, for more details.