Budget Calculator: Simplify Your Monthly Budgeting

Key Takeaways

• Our budget calculator can show you where your money goes and help you balance your spending across three categories: needs, wants, and savings.

• This calculator uses the 50/30/20 rule to divide your income: 50% for essentials, 30% for fun, and 20% for savings.

• Start with what you earn, subtract what you spend, and adjust your categories until you’ve achieved a balanced budget.

A budget is the foundation of your finances. Our calculator makes it easy to see how your spending stacks up against the 50/30/20 budget rule. Learn more about how this budgeting rule works and what to do with your results.

What is a budget?

A budget is a plan that tracks how much money you earn and where you spend it each month. Think of it as a roadmap that keeps your finances on track.

Many people think budgeting means restricting yourself, but it’s the opposite. A budget can give you freedom to spend on what you love because you’ve already planned for your bills and savings.

How to create a budget

Take these simple steps to create a budget that works for you.

• Calculate your monthly income: Add up all the money you bring home each month after taxes, including any income from side hustles.

• List your expenses: Write down everything you spend money on, starting with fixed bills like rent, then variable costs like groceries.

• Subtract your expenses from your income: Aim for a zero-based budget where every dollar has a job, whether that’s paying rent or funneling into savings.

• Adjust as needed: If you’re spending more than you earn, you may need to cut back in your “wants” category.

How to use the budget calculator

Here’s how to use the budget calculator, step by step.

• Monthly after-tax income: Enter your total monthly income after taxes. If you have automatic 401(k) deductions, add them back so you can categorize them under savings.

• Essentials: Enter nonnegotiable expenses like bills, housing, and transportation.

• Wants: Enter expenses for non-necessities like travel, entertainment, or hobbies.

• Savings: Enter monthly contributions toward emergency funds, retirement, and extra debt payments.

Hit “Calculate” to see how your results compare to the 50/30/20 rule.

Understanding your budget results

Once you’ve gotten your results, consider how they align with the 50/30/20 rule of budgeting.

• Needs make up 50% of your budget and include essentials like housing, food, utilities, and minimum debt payments. If you’re over this amount, look at lowering your major costs or finding ways to increase your income.

• Wants account for 30% and include fun stuff like dining out, hobbies, and subscriptions. This is often the easiest category to adjust when your budget is tight.

• Savings are the final 20%, which covers emergency funds, retirement contributions, and extra debt payments. Start where you can if this percentage isn’t realistic for you yet.

50/30/20 vs 70/20/10: Which budget method is right for you?

The 50/30/20 rule isn’t your only option for budgeting your money. The 70/20/10 rule combines needs and wants into one category, which can work better if your essentials take up more than half your income. It incorporates minimum debt payments into this 70% category, while setting 10% aside for extra debt payments or donations.

What to do if you’re spending more than you earn

If the calculator shows you a negative number, don’t panic. It just means you need to make some adjustments.

• Audit your “wants”: Look for subscriptions you don’t use or dining habits you can swap for home-cooked meals.

• Negotiate bills: Call your internet or insurance providers to see if you can get a lower rate.

• Pause savings temporarily: If you’re building debt just to put money aside, it might make sense to pause contributions until your cash flow is positive.

• Boost your income: Consider a side gig or selling items you no longer need to bridge the gap.

Tips for sticking to your budget

Once you’ve created your budget, your next step is sticking to it. Here are some tips for staying the course.

• Automate everything: Set up automatic transfers for your bills and savings so you don’t have to think about it.

• Check in weekly: Don’t wait until the end of the month. Review your spending once a week to catch issues early.

• Give yourself a buffer: Leave a small cushion in your checking account for unexpected costs so you don’t overdraft.

• Be kind to yourself: If you overspend one month, don’t give up. Just adjust your plan for next month and keep going.

Start building your budget today

You’ve taken the first step toward building and following a budget by crunching the numbers. Now track your spending for one month to see if it matches your budget.

You’ll likely find areas to adjust, and that’s normal. The goal is progress, not perfection. Learn more helpful tips in our beginner’s guide to making a budget.