Components of the Budget
To use this calculator, input your income and expenses above. Each expense area is broken into subcategories. Click the plus sign to see the subcategories. If you see an “i” next to the subcategory name, you can hover over that to see a guideline for what that number might be if you don’t have the exact figure at hand.
Here are the general categories of income and expenses you’ll input:
- Income: Your total take-home income, including any money you earn from side hustles, alimony, child support, part-time jobs, etc.
- Housing: Your rent or mortgage payment. You can also account for other necessary housing-related expenses, like utility bills, homeowners or renters insurance, and maintenance bills.
- Food: What you spend on food from the grocery store, eating out at restaurants, getting takeout, or meal delivery services.
- Transportation: Public transportation like buses, but also car-related expenses, including your monthly loan payment, repairs, insurance, tolls, and fuel.
- Education: Tuition, supplies, fees, etc. for children in K-12 and adults going to college. Also include any student loan payments you have.
- Personal and family: Cellphone bills, entertainment—including TV streaming services like Netflix and other subscriptions like Spotify—fitness, pet expenses, household supplies, personal care (haircuts, toiletries, etc.), and clothing. This category also includes debt payments (outside of mortgages and student loans) and vacation expenses.
- Health care: This includes all the out-of-pocket costs for health insurance, dental insurance, and vision insurance, such as premiums (if they’re not deducted from a paycheck), copays, coinsurance, and deductibles. It also includes medications, glasses or contacts, and the like.
- Savings and investments: Money that you regularly save for an emergency fund or vacation fund, as well as long-term goals like college, retirement, and a home.
- Other: This is for all other expenses that don’t quite fit in any of the categories above.
Budgeting Calculator Results Explained
Here’s how to interpret what the calculator computes:
- Total monthly income: This is the same as what you entered above.
- Total monthly expenses: This is the total amount of money you’re spending each month. Your goal is to make sure your expenses are less than your income so that you’re not relying on savings or debt to get by.
- Percentages of your budget: The pie chart shows the percentage of your budget each expense eats up. You can compare these with established guidelines, such as the 50/30/20 budgeting rule.
- Remaining monthly funds: This is how much you have left each month. It’s the gap between how much you bring in and how much you spend. The bigger the gap, the better, because then you’ll have more money to save for big goals like retiring or buying a home.
How To Use This Budgeting Calculator to Improve Your Finances
This budget shows you how you’re currently spending your money. That’s good for establishing a baseline, but you can take it a step further by playing around with the calculator and entering new numbers. For example, you can see how much you’ll have left over each month if you move to a cheaper apartment, spend less on groceries, or cancel that Hulu subscription.
Once you’re happy with how much money you have allocated to each category, you can write these numbers down as a guide, but don’t stop there. A plan is good in theory, after all, but it doesn’t become real until you actually follow it. Track your spending against your budget each month with budgeting software programs or apps, or even just pen and paper.
What To Do If Your Expenses Are More Than Your Income
If your expenses are higher than your income, know that you’re not alone. That said, it’s good to get your expenses under control if you can, because otherwise you’ll fall deeper into debt. Here are some things you can do:
- Find ways to boost your income: Whether it’s working a side hustle or a part-time job or asking for a raise at your current job, finding a way to boost the income side of the equation can have the biggest impact of all.
- Review your spending: It’s easy to guesstimate your spending with the calculator above. But going through your bank statements to see what you really spend can help you find areas you can work on.
- Negotiate with creditors: If debt payments are pushing you into the red, reach out to your creditors. You can ask a lender for a modified payment plan or refinance your debt into more manageable payments.
- Do a no-spend challenge: Try to eliminate spending for a month (or several) on a problem area in your budget, such as clothing or entertainment. This doesn’t mean you deprive yourself of these things forever; it just normalizes not spending as much money on them and finding cheaper alternatives.
- Seek help: The National Foundation for Credit Counseling is a reputable nonprofit organization that offers financial planning help. You can get personalized budget assistance and help with more complicated things, like negotiating with your creditors or finding out which financial assistance programs you qualify for.
Where To Put Extra Money If You’re Under Budget
If you have money left over at the end of the month, congrats! Now you can really move your financial situation forward. Here are a few things you can do—ranked by importance—with that extra money.
- Put it in your emergency fund: While you had a good month now, it probably won’t always be that way. If you don’t have a fully funded emergency fund, this is a great place to put that money.
- Pay down debt: If you have debt, now’s a good time to knock some of it down. Debt with a high interest rate is generally better to pay off before lower-interest debt, since that’ll save you more in the long run.
- Save it for later: If you have a savings goal you’re trying to reach, such as saving for a house, that extra money can go a long way. You can also consider parking it in your retirement account.
What Is a Budget?
A formal budget is a plan for how you want to spend your income. It can be as fancy as a spreadsheet or software program or as simple as a list of income and expense categories and amounts written on a sheet of paper. It’s a way to make sure you’re not spending more than you’re earning and that you have enough left over to reach your financial goals.
Without a budget, it’s easy to lose track of spending and have nothing left to show for your hard work. Budgets solve that problem by giving you a plan to stick to.
Benefits of Using a Budget
There are a lot of reasons to use a budget:
- Less stress: Even though budgets can be challenging at first, in the long run they can lower your stress by helping ensure you’ve got all your expenses covered and can save for the future. Money is cited as a source of stress for most people, and budgets can help to solve these financial problems over time.
- Prepare for emergencies: Your budget should include saving for an emergency fund that can keep you from going into debt if you lose a job or have an unexpected expense.
- Reach your big financial goals: Budgets make sure you have enough for your everyday spending and those longer-term goals that are hard to save for.
- Better credit score: Budgets can help you plan your debt payments each month. By paying on time, you’ll see your credit score rise over time.
Tips for Sticking to a Budget
Sticking with a budget isn’t always easy. Here are some tips for how to stay with it:
- Reframe it as a “spending plan”: The word “budget” has a negative connotation for some of us. It sounds like your parents lecturing you when you were a child. So instead of thinking of it as a “budget,” think of it as a “spending plan” to help you get where you want to go.
- Do it often: It’s harder to keep up with your budget if you wait too long between check-ins, because it’ll be harder to track down expenses and make sure everything adds up. Getting in the habit of checking in on your spending—like every week—can be a big help.
- Reward yourself: Give yourself a little extra motivation to follow your budget by setting up a rewards system. For example, if you’re under budget or if you keep up with your budget for a few months in a row, you can reward yourself with something you can afford and appreciate.
- Set budget date nights: If you have a spouse or partner, make a point to check in with them regularly. You can even set up fun “budget date nights” so it’s not a chore.
Other Budgeting Tools
Budgeting is tough, but the good news is that there are lots of tools that can help you. Here are a few places to get started:
- Budgeting apps: If you use your smartphone a lot, having a budget app to keep you on track while you’re on the go can be a big help. These apps often provide a quick snapshot and can link up automatically with your credit card or bank account for real-time updates.
- Budgeting software: If you prefer to dig into the nitty-gritty of how you spend, a budgeting software program can be a powerful tool to help you stay on track.
- Personal finance software: These programs go beyond your budget and show you your entire financial picture, such as your net worth, debt amounts, investments, and a lot more.
Budgeting Calculator
Use this budgeting calculator to organize your finances, plan for savings, and manage your monthly expenses. Simply fill in all relevant fields, and adjust figures to see how you can optimize your savings. Enter your net income in the income field, this is the amount you receive after taxes, benefits, and pre-tax retirement contributions.
Key Budgeting Components
To use this calculator, input your income and expenses in the designated fields. Expenses are divided into subcategories for better clarity. Click the plus sign to reveal these subcategories. If an “i” icon appears next to a subcategory, hover over it for guidelines if you’re unsure of the exact amount.
Here are the main categories of income and expenses:
- Income: Your net income, which may include salary, side income, alimony, child support, and other sources.
- Housing: This includes rent or mortgage payments along with associated expenses like utilities, insurance, and maintenance costs.
- Food: Calculate your food expenses, including groceries, dining out, takeout, and meal delivery services.
- Transportation: This category covers public transit and car-related costs such as loan payments, insurance, repairs, tolls, and fuel.
- Education: Include costs for tuition, supplies, and fees, as well as student loan payments.
- Personal & Family: Expenses in this category may include phone bills, entertainment, subscriptions, fitness, pet care, household supplies, personal care, clothing, debt payments, and vacations.
- Health Care: Include out-of-pocket health, dental, and vision insurance costs, along with copays, coinsurance, medications, and related expenses.
- Savings & Investments: Regular contributions to emergency funds, vacation savings, and long-term goals like retirement and college.
- Other: Any expenses that don’t fit into the categories above.
Interpreting Budgeting Calculator Results
- Total Monthly Income: This figure reflects the total income you entered.
- Total Monthly Expenses: This is your total monthly spending. Aim to keep this below your total income to avoid dipping into savings or accruing debt.
- Budget Percentages: A pie chart will show how each expense category compares to your total budget. You can align these with budgeting rules like the 50/30/20 guideline.
- Remaining Monthly Funds: This is the difference between your income and expenses. The larger the gap, the more you can save for future goals.
How to Use This Budgeting Calculator to Improve Your Finances
The calculator provides a snapshot of your current spending habits, but you can adjust the numbers to see how changes impact your finances. For instance, try lowering your rent or food expenses to see how much you could save monthly. Once satisfied with your budget, track your spending using apps or even pen and paper to ensure you stay on target.
What to Do If Your Expenses Exceed Your Income
If your expenses surpass your income, you’re not alone. However, it’s important to address the issue to avoid deeper financial troubles. Here are a few strategies:
- Increase Your Income: Consider picking up a side job, asking for a raise, or pursuing other income-boosting opportunities.
- Review Your Spending: Analyze your bank statements to find areas where you can cut back.
- Negotiate with Creditors: If debt payments are straining your budget, reach out to creditors for potential relief, such as modified payment plans.
- Try a No-Spend Challenge: Reduce spending in specific budget areas, like entertainment or clothing, for a month or more.
- Seek Professional Help: Consider contacting a nonprofit like the National Foundation for Credit Counseling for personalized assistance.
Where to Put Extra Money If You're Under Budget
If you have extra funds at the end of the month, congratulations! Here’s how to make the most of that surplus:
- Build Your Emergency Fund: Start or continue saving for unexpected expenses.
- Pay Down Debt: Prioritize paying off high-interest debt to save on interest in the long run.
- Save for Future Goals: Use extra funds to contribute to savings goals, such as purchasing a home or retirement.
What Is a Budget?
A budget is a financial plan that outlines how you intend to spend your income. Whether you use a spreadsheet, software, or just a notepad, a budget helps ensure you don’t overspend and that you’re on track to meet your financial goals.
Without a budget, it’s easy to lose control of your spending. By creating and following a budget, you gain a clear roadmap for managing your finances.
Benefits of Using a Budget
Budgets offer numerous advantages:
- Reduced Stress: While budgets may seem restrictive, they ultimately reduce financial stress by ensuring your expenses are covered and your savings goals are achievable.
- Preparedness for Emergencies: A well-crafted budget includes an emergency fund, which can prevent debt in the event of a financial crisis.
- Achievement of Long-Term Goals: Budgets help you allocate money for everyday expenses and larger goals, like buying a home or retiring comfortably.
- Improved Credit Score: By sticking to your budget and paying your bills on time, you can gradually improve your credit score.
Tips for Sticking to a Budget
Maintaining a budget can be challenging, but these tips can help:
- Reframe Your Thinking: Consider your budget as a “spending plan” to achieve your goals, rather than a restriction.
- Regular Check-Ins: Frequently review your budget to stay on track. Weekly check-ins can help ensure you’re not missing any expenses.
- Reward Yourself: Set up small rewards for sticking to your budget, like a treat or a fun activity within your means.
- Budget Date Nights: If you share finances with a partner, make budgeting a team effort by scheduling regular discussions about your finances.
Other Budgeting Tools
Budgeting doesn’t have to be overwhelming. There are many tools available to assist you:
- Budgeting Apps: Mobile apps can help you manage your finances on the go, offering real-time updates and insights.
- Budgeting Software: For a more detailed view, budgeting software can help you analyze your spending in-depth.
- Personal Finance Software: These programs offer a comprehensive look at your financial situation, including debt, net worth, and investments.