Budget Calculator

When it comes to personal finance, success revolves around a simple math equation.

How much money are you bringing in?

How much money are you spending?

Calculate your total monthly spending by entering your expenses into this budget calculator.

Budget Surplus or Budget Deficit?

If you have a surplus and use it for savings (preferably 10% of your income) and retirement planning, you’re already ahead of the game. If the expenses overrun your income, that’s when the problems start.

There are the basics — housing, automobile, utilities, insurance, food, repair and maintenance — that are part of everyone’s calculations.

But it’s the management of extra things, the discretionary spending, that really define whether a budget works well.

We can all use some helpful reminders on how to budget. Of course, on the flip side, there are also ways to boost your income and make more money to allow more spending.

Either way, the best strategy is careful planning and that’s where a personal finance calculator can facilitate your best money strategy.

If you ever wonder where your money is going each month, this calculator can help you get a better handle on things.

» Learn More: Average Monthly Expenses

Budget Expense Categories Explained

Mortgage Payment or Rent

When calculating how much of your monthly income to use for a mortgage payment, be sure to consider your total housing payment (and not just the mortgage). That includes private mortgage insurance (PMI), property taxes and homeowner’s insurance.

Conservatively, you should shoot to spend 25% of your pre-tax income, but it should never surpass 35%. Be careful, though. You could qualify for a larger loan than your initial goal. Ignore the temptation. Never think you can actually afford it, even though it has been approved by a lender. You don’t want to be “house poor’’ with too much of your income going for the mortgage payment, while putting too much strain on the rest of your budget.

Rule of thumb: If your mortgage payment is equal to one week’s paycheck, you’re doing well. Remember, the more you spend on your home, the less you have available to save for everything else.

Vacation Home

If you’re in love with a vacation home, you better rely on your head and not your heart. When are you in good shape for such a transaction? If your primary residence is paid off and you can pay cash for the vacation home, then it’s OK to move forward. You might also consider renting on a short-term basis to see how things work.

You should only purchase a vacation home if you answer affirmatively to the following questions. Am I saving 15% of my income for retirement? Do I have a three-to-six-month emergency fund in place? Am I saving for my kids’ college?

Automobile Loan(s)

Don’t get taken by those sexy automobile ads. They create an emotional decision. You feel compelled to show the world that you are successful and extremely cool.

It’s a trap.

Most financial advisors suggest 10% of your monthly gross income goes to car payments or lease installments. According to the widely prescribed 20/4/10 rule, you should make a down payment of at least 20%, finance a car for no more than four years and not let your total monthly vehicle expense (payments and insurance) exceed 10% of your gross income.

There are some situations where you could spend more. Maybe you get a good interest rate or a rebate. Never agree to a longer loan, though. That’s a trick. You get lower monthly payments, sure, but it’s a shell game that makes you think you can afford a more expensive car.

Hint: If you need to finance a car for six years, that’s a sign you can’t afford it. Move on.

Personal Loan(s)

Famous quote: Neither a borrower nor a lender be.

Pat attention. Bill Shakespeare knew of what he wrote.

Charge Account(s)

Credit cards are a convenience and a very useful one … as long you pay off your balance each month. Do not regard them as lending instruments. American households with credit-card debt owe an average of $8,158 with an average interest rate of 16%.

Would you take out a loan and pay 16% interest on it? Unfortunately, many American families do, using their credit cards.

Better (and more realistic) strategies for credit cards would be:

• Never miss a payment — ever!
• Pay more than the minimum amount and work to erase your balance.
• Think twice about purchases. Only buy things you really need. If you’re in doubt, sleep on it.

Federal Income Taxes

Death and taxes, right? The only things certain in life. There are all sorts of ways to pay the Internal Revenue Service — through direct pay, with a debit or credit card, electronically, by check or money order.

If you are facing a hardship, you can file for an extension or apply for an online payment agreement to settle your tax liability over time. The IRS can work with people who owe more than they can afford, sometimes utilizing an Offer in Compromise to settle.

If you are self-employed or gaining substantial outside income, you probably need to make estimated quarterly payments. The IRS expects to receive its taxes as money has been earned.

State Income Taxes

Only seven states — Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming — don’t require state income tax. Those states still need money for government services, but largely raise it through property taxes, sales taxes and other fees.

FICA (Social Security Taxes)

Employers are required to withhold FICA taxes (for Social Security and Medicare). The employer pays half. If you are self-employed — making money in your own business as an independent contractor, freelancer, sole proprietor or member of an LLC or an S corporation — you must pay the entire amount of Social Security/Medicare on your self-employment income.

Real Estate Taxes

These include the taxes paid at closing when buying or selling a home as well as the taxes paid annually to your county or town’s tax assessor on the assessed value of your property. These are paid directly or through a mortgage escrow account.

Other Taxes

Depending on your employment, business interests and lifestyle, you might be liable for other taxes. It helps to be educated in these matters or use the services of a trained financial counselor.

Utilities

When you have a house or apartment, you pay for utility services like electricity, gas and water. It’s important to pay on time (or else these services might be shut off). If you have a poor credit history, you might need to jump through some extra hoops (such as paying a deposit) to get your utilities approved.

The U.S. Department of Energy estimates that more than half of your energy bill comes from heating or cooling your home. Some utility companies offer budget billing plans that allow a flat fee each month to help with expenses. You might be able to lower your utility bills by doing an energy audit, which will determine where you’re wasting energy while determining the efficiency of your heating and cooling systems.

Household Repairs and Maintenance

The average American home requires about $1,204 per month in maintenance costs. That’s $14,448 annually.

Where does the money go?

It’s split between home insurance ($79), private mortgage insurance ($158), snow removal and lawn care ($130), property taxes ($218), utility bills ($201), homeowners association fees ($250), then repairs and general maintenance ($168).

You can always shop around for a better-priced home insurance policy. You can avoid private mortgage insurance by putting 20% down on your home purchase. Sometimes, a few degrees difference in the heating/cooling temperature can save you some bucks, too.

Food

According to the most recent data from the U.S. Bureau of Labor Statistics, the average American household spent about 10% of its total budget on food. The average food cost for a U.S. household was $6,602 — roughly $2,641 annually per person (based on the average 2.5 people in each household).

Ready-made savings are available by limiting trips to the restaurant. And when you do treat yourself by eating out, lay off the pricey soda and alcohol to go with some free water. Over time, that quickly adds up.

Clothing and Laundry

According to the U.S. Bureau of Labor Statistics, the average American family spends 3.5% of its income (about $1,700) on clothes annually.

It pays to check out the discount rack. For high-end purchases, go for the classic look instead of something too radical.

And how do those clothes get clean?

Assuming eight loads of laundry per week, that’s about 416 loads per year. The annual cost is $665.66, including laundry detergent, bleach, fabric softener and the cost of heating the water.

Educational Expenses

The average American family spends $58,464 on a child’s education — from primary school through the end of undergraduate studies at a college or university. Private-school attendance will make those figures rise, obviously.

College costs can be augmented with scholarships and grants. Student loans also are available, but they have created widespread levels of debt.

Latest figures have the outstanding student loan debt in the U.S. at approximately $1.3-trillion. More than 44-million borrowers have an average outstanding loan balance of $37,172.

Child Care

Talk about an eye-opening statistic: In 33 states, the cost of annual infant care is more than college tuition ($9,589 annually to $9,410 for tuition). When considering the average cost of a full-time nanny ($28,000), child care is clearly a full-time business.

Depending on the income and family needs, it might be more cost efficient for one parent to stay home with the child. There are also child care-sharing arrangements that could be organized in a neighborhood to save money.

Either way, it’s a financial line item that gets your attention.

Automobile Expenses

The average cost of gasoline was $2.49 per gallon in 2017, according to Gas Buddy. Everyone has different needs, but consumers with longer commutes can easily surpass the $300 mark in monthly gasoline costs.

With potential parking costs and other regular car maintenance — causing car expenses to surpass the 10% mark of total income — it’s enough to make people investigate public transportation if their area has an efficient system. Carpools with co-workers are another way to save money.

Other Transportation Expenses

Public transportation could come under this heading and that could be a worthy investment.

Life Insurance Premiums

If you have a young family, life insurance could be a wise investment. If something happens to you, what would the family do for income?

Five factors affect your life insurance costs:

• Age: Rates increase as you age.
• Health Profile: Smoking and chronic conditions create higher rates.
• Gender: Women live longer. Typically, women pay lower life insurance costs.
• Occupation: A sky-diving instructor pays more than a receptionist. Your risk factors influence life insurance costs.
• Exams: Physical examinations can clarify your situation and perhaps save you some money.

What are the average costs? For a 35-year-old female non-smoker seeking $1-million worth of life insurance with monthly “level pay’’ (same payments for the duration of the policy), it would require about $65 per month. For a 20-year $1-million term policy, the monthly costs would be about $53.

Being a non-smoker is the most critical factor to keep life insurance costs as low as possible. Rates could also be reduced by maintaining a healthy weight, getting an annual physical and maintaining your blood sugar to reduce the risk of diabetes.

Homeowners/Renters Insurance

You’ll want to shop around when seeking homeowners’ insurance. Once you find what you like — and it’s sometimes advantageous to get home and auto policies from the same insurer — it pays to stay in place.

To save money, you can make your home more disaster resistant and improve your home security. You can probably raise the amount of your deductible, too. At least once a year, you should review your policy limits and the value of your possessions.

Automobile Insurance

You can save money on car insurance by comparing rates annually. If you’ve been with the same insurer for a while, it might be difficult to do better, especially if you haven’t had any claims. But it doesn’t hurt to check.

More often than not, you’re best when going with a top-rated insurer (such as USAA or Amica). It can be jarring when you think it’s a good deal with low premiums, but you encounter low-balled loss estimates, cutting corners at the repair shop and jacked-up prices on original-equipment replacement parts.

Setting the right deductible is hugely important. A higher deductible reduces your premium because you’re paying more out of pocket if you have a claim. Increasing your deductible from $200 to $500 can cut your premium by 15 to 30%. If you go to $1,000, you could say 40%. It’s a calculated strategy — based on a good driving record and no at-fault accidents — that could save lots of money.

Medical, Dental and Disability Insurance

If your job doesn’t offer health insurance, you’re about to enter a dizzying, controversial part of modern American life. Where do you find affordable health insurance? It’s out there, but it requires lots of legwork.

By putting the work in — comparing different types of health insurance plans, provider networks, out-of-pocket costs and benefits — you can determine the best plans for your needs.

The need for dental and disability insurance will vary by family.

Entertainment and Dining

It’s tricky to utilize your discretionary spending when you’re on a tight budget, but it can be done. Always look for specials and use coupons. Like big-screen movies? Consider the matinees.

Dining out can be a real pleasure as long as you don’t overdo it. For health and financial reasons, it’s useful to box up half of your generous portion, making for a nice added lunch. Again, stay away from the soda and alcohol, which are big-ticket items for any restaurant.

Recreation and Travel

By planning ahead and looking for bargains, you can save big money on recreation and travel. There are ways to live like a king on bargain prices if you search for off-peak deals. Five-star hotels are nice — on an expense account. If it’s your dime, you can always find a more economical place to put your head down at night.

Club Dues

Whether it’s a hobby or social activity, belonging to clubs can be invigorating and fun. If belonging to a club is strictly for appearance sake, though, you might re-evaluate where your money is being spent.

Hobbies

Hobbies are part of what makes life worth living. Consider turning your passion into a second income. Could your talent or skill have money-making potential? Check it out.

Gifts

Whether it’s your church or another worthy cause, giving back is a noble and responsible thing to do. Such gifts are generally tax-deductible, so your financial outlook will draw a benefit, too.

Major Home Improvements and Furnishings

Every home needs some sprucing up over a period of time. By planning ahead and budgeting for the changes and renovations, you can educate yourself on the best materials and probably save some money, too.

Professional Services

It’s a good line item to have in any budget. Whether it’s someone to prepare your taxes, give you financial advice or help you attain a new job skill, you generally get what you pay for.

Charitable Contributions

By supporting worthy causes, you will stand for something bigger than yourself. It makes for a well-rounded life and it’s tax-deductible, too.

Other and Miscellaneous Expenses

What has been left out? We’re not sure, but it’s always something. Give yourself a little financial cushion and you’re bound to find a good use for the money.