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Use this budget calculator to plan estimated expenses based on income. Just enter your income (annual or monthly) and this budgeting tool will calculate the conventional spending amounts based on normal percentage ranges. These ranges were determined by cross referencing the Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics against various personal finance guru recommendations.
You can then create a household budget worksheet to use as a reference point for creating a budget.
Your personal budget will vary within these percentages based on personal preferences and income level. For example, lower incomes will have higher percentages for necessities like food. Higher incomes will have larger percentages for pension and insurance but lower for food.
This calculator works great in tandem with the expenses calculator here to compare these suggested allocations with your actual spending.
How To Start Saving And Control Spending Using A Budget
Do you ever wonder where all your money goes?
Is there more month than money to pay for it?
If this is your scenario then this Budget Calculator can help you take control of your money and get your savings back on track.
There are lots of free budget planners online that can help you create your first budget template. But before you jump in, make sure that you are ready with your list of inputs necessary for creating a budget.
Plan Before You Start
The purpose of budgeting is to allocate your income between your estimated expense categories for the month.
However, the process can be confusing because there are so many different expense categories plus some expenses get paid monthly, others quarterly, and still others only occur annually.
How can they all fit within a single budget?
Elements For Creating A Budget
There are various elements that make up the income portion of your budget:
- Net Income – Your salary after deducting taxes.
- Rent Income – Money received from renting a house or other property.
- Interest Income – The amount of money earned from deposits after deducting taxes.
- Pension – The money received during retirement.
- Other Earnings – Income received in the form of allowances, subsidies, etc.
Similarly, you can divide the monthly expense portion of your budget into the following categories:
- Rent Expense – The amount paid for house rent or mortgage payments.
- Groceries – The actual amount spent in your groceries.
- Utilities – The money spent for paying water, electricity, telephone, etc.
- Debt – The actual amount you pay for your credit card and other debts.
- Transportation – Expenses for maintaining your car like fuel, repairs, car washes, etc.
- Miscellaneous Expenses – The amount of money reserved for unexpected necessary expenses.
- Savings – The amount you need to save each month.
- Recreation/Vacation – The amount you need to allocate for your yearly family vacation for fun money.
Irregular or annual expenses can be budget busters if mishandled and must be treated differently.
The best strategy is to take the annual amount and divide it by 12 to get a monthly expense and then save that amount every month so that you have the cash on hand to pay the annual bill when it arrives. Below is a list of common expenses paid annually:
- Insurance Premiums – The premium paid to your insurance provider every year like car, home, life, and disability.
- School Fees – The amount you pay for your family’s education.
- Vacation/Recreation – The amount you need to set aside for your family’s vacation and recreational needs.
Steps To Using A Budget Calculator
- Set your financial goal. What do you want the end result of your budget to look like?
- Write down all the money coming in that makes up your income.
- Record all your monthly expenses and categorize them into fixed (unavoidable) or variable (avoidable) expenses. Don’t forget to include the non-monthly expenses, which includes payment for insurance premiums, school tuition fees, property taxes, etc. This list should also include your monthly debt payments.
- Allocate funds for miscellaneous expenses that can’t be predicted. This will serve as your emergency fund.
- Sit down with your spouse when setting up a budget. It is best that you agree on which expenses you need to prioritize.
- Set a schedule for implementing the family budget template, review your list every month, and adjust your expenses based on your needs.
Ways To Stick To Your Budget Plan
Once you’re done creating a budget, it is important that you stick to it. Sticking to your budget plan can be frustrating especially when you have big expenses coming up that weren’t anticipated. Below are tips to help you avoid this problem:
- Evaluate your need and discuss with your spouse. Use tools like this Budget Calculator to make the process dynamic so you can add any unforeseen expenses in your next month’s budget.
- Set a savings goal. Allocate money to save each month and build a cushion.
- Avoid using your credit card for paying your expenses. This will give you better control over your cash.
- Pay off your debt. Accelerate your debt payments and avoid paying only the minimum amount required on your credit card.
- Monitor your expenses and eliminate bad spending habits.
- Examine your spending and check which expenses you can reduce in future months.
Budgeting is an essential tool on your path to financial freedom. You must spend less than you make to create savings. Unless you have extraordinary self-discipline, it won’t happen without a budget plan.
When you follow a budget you have more control over your money and increase savings. The first step is debt freedom, and the second step is financial freedom, but it all starts with proper budgeting.
Other Personal Finance Calculators:
- Net Worth Calculator What is my financial net worth?
- Expense Calculator How much of my income is going to each expense category?
- Convert Irregular Payments To Monthly Budget How much should I budget each month for all my quarterly, annual, and irregular payments?
- Compound Interest Calculator How will my savings compound and grow over time?
- Cash Flow Calculator How do I project all my irregular income and uneven expenses into a reliable cash flow projection?
- Present Value Calculator What is the value today of a lump sum payment in the future?
- Latte Factor Calculator Do periodic, unnecessary expenses really matter?
- Life Insurance Calculator How much life insurance do I need?
- Wage Calculator – Convert Salary To Hourly Pay What does my salary equal in hourly pay – both real and nominal?