Budget Calculator
Create a comprehensive monthly budget breakdown. Enter your income sources and expenses by category to see where your money goes, how much you can save, and whether your spending aligns with recommended budgeting guidelines.
How to Use This Budget Calculator
1. Start by entering all your monthly income sources at the top - primary salary (after taxes), side income, investment returns, and any other earnings.
2. Fill in your expenses across each category: Housing, Transportation, Food and Living, Entertainment and Subscriptions, and Debt and Savings.
3. Watch the category totals update in real-time as you enter your expenses.
4. Click "Calculate Budget" to see your complete financial picture including remaining income and the visual breakdown.
5. Review how your spending compares to the recommended 50/30/20 budget rule.
What is a Monthly Budget?
A monthly budget is a financial plan that outlines your expected income and planned expenses for a one-month period. It helps you understand where your money goes, identify areas where you might be overspending, and ensure you are saving enough for your financial goals.
Creating and following a budget is one of the most important steps toward financial health. It prevents overspending, reduces financial stress, and helps you build wealth over time by ensuring you consistently save and invest.
What is the 50/30/20 Budget Rule?
The 50/30/20 budget rule, popularized by Senator Elizabeth Warren in her book "All Your Worth," provides a simple framework for allocating your after-tax income:
- 50% for Needs: Essential expenses you cannot avoid - housing, utilities, groceries, transportation, insurance, and minimum debt payments
- 30% for Wants: Non-essential spending that improves your quality of life - dining out, entertainment, hobbies, streaming services, and vacations
- 20% for Savings and Debt: Financial goals - emergency fund, retirement savings, investments, and extra debt payments beyond minimums
This rule provides flexibility while ensuring you live within your means and build financial security. If your needs exceed 50%, look for ways to reduce housing or transportation costs. If savings fall below 20%, consider cutting wants to boost your savings rate.
Budget Categories Explained
- Housing: Your largest expense typically - rent or mortgage, utilities, internet, home insurance, and property taxes
- Transportation: Car payment, gas, insurance, maintenance, public transit, or rideshare costs
- Food and Living: Groceries, household supplies, personal care, and clothing
- Entertainment: Streaming services, gym memberships, hobbies, dining out, and subscriptions
- Debt and Savings: Student loans, credit card payments, savings contributions, investments, and emergency fund
Tips for Successful Budgeting
- Use net income: Budget with your take-home pay after taxes, not your gross salary
- Track everything: Even small purchases add up - track coffee, snacks, and impulse buys
- Build an emergency fund: Aim for 3-6 months of expenses before aggressive investing
- Review monthly: Compare actual spending to your budget and adjust categories as needed
- Automate savings: Set up automatic transfers to savings accounts on payday
- Plan for irregular expenses: Budget monthly for annual costs like insurance, subscriptions, and gifts
When Your Budget Does Not Balance
If your expenses exceed your income, you need to either increase income or decrease spending. Start by reviewing wants - dining out, subscriptions, and entertainment are the easiest to reduce. If that is not enough, look at housing and transportation, which often represent the biggest opportunities for savings.
If you have remaining income after expenses, direct it toward your financial priorities: emergency fund first (until you have 3-6 months of expenses), then high-interest debt, then retirement savings and other investments.
Budget Formulas
Remaining Income: Total Income - Total Expenses
Category Percentage: (Category Total / Total Income) x 100
Savings Rate: (Savings / Total Income) x 100 - aim for 20% or higher