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I’m making a rag quilt using 8 inch squares and the finished size will be 6.5 inches.

The quilt will be 12x15 6.5-inch squares (180 squares) which measures out to 78”x97”

Trying to figure out how much yardage I will need.

I figure roughly that one yard of fabric will yield 20 8-inch squares.

180/20 = 9 yards of fabric ?

Your figures sound just right to me. However, that will give you enough squares for only one side of the quilt. You will need twice that much so you have squares for both sides.

I also have a question. Will this be for using on a twin bed? If so, the size you are planning will be perfect. Most of the rag quilts I have seen were intended only as lap quilts or throws so were smaller. If that's your intention, I don't think it needs to be that large.

Yes, I will have to double the yardage for the back. I plan to make it twin-ish as a gift for girls ages 5 yrs & 8 yrs. I found some Girl Scout flannel fabric that will be perfect for them.