Your cart is currently empty!
Budgeting Calculator & Formula
Budgeting Calculator
Budgeting Formula
The budgeting calculator uses the following formula to help you understand your monthly budget and savings potential:
Total Expenses: Sum of Housing, Food, Transportation, Savings, and Other Expenses
Remaining Balance: Income – Total Expenses
Explanation
Understanding your monthly expenses in relation to your income is critical for effective budgeting. By categorizing your expenses and subtracting them from your income, this calculator shows your remaining balance, which can guide your spending and savings goals.
Real-Life Example
For example, if your monthly income is $4,000 and you have the following expenses:
- Housing: $1,200
- Food: $500
- Transportation: $300
- Savings: $600
- Other: $400
Step 1: Calculate total expenses = 1200 + 500 + 300 + 600 + 400 = $3,000
Step 2: Remaining Balance = Income – Total Expenses = 4000 – 3000 = $1,000
This remaining balance represents funds available for additional savings or discretionary spending.
Benchmark Indicators
Recommended budgeting benchmarks:
Housing: 25% – 30% of income
Food: 10% – 15% of income
Savings: At least 10% – 20% of income
Frequently Asked Questions
What is a budget?
A budget is a plan for managing income and expenses, helping you track spending and achieve financial goals.
How much should I allocate to savings?
Aiming to save 10-20% of your income is generally recommended, but this may vary based on personal goals.
What percentage of my income should go towards housing?
Housing costs should ideally be no more than 25-30% of your income.
How can this calculator help with budgeting?
This calculator provides a quick summary of your income versus expenses, making it easier to see how much you can save or where you may need to cut back.
Is it better to save or pay down debt?
Both are important. Generally, it’s advised to save a small emergency fund while also paying down high-interest debt.
