Budget Calculator | BankruptcyHQ
What does it mean to have a budget?
A budget is a methodical plan to spend money in a certain way, as well as an estimate and planning of income and expenditures. Others may prefer a different strategy, while others may like our budget calculator or free budget template.
Budgets are often created to accomplish particular financial goals, such as paying off several credit cards, meeting a specified savings goal, or getting income and expenditure back on track. There are a variety of reasons why people create budgets, as well as a variety of strategies for doing so.
Modern technology has enabled a plethora of alternative budgeting tools and programs. They all have benefits and drawbacks, but the greatest one is the one that budgeters will strive to stick to as much as possible.
What is the Best Way to Make a Budget?
Living within your means and setting goals for the future are the two main components of budgeting. The key to effective budgeting is having a clear personal budget and adhering to it.
Keeping Your Expenses to a Minimum
Throughout history, thousands of financial advisors, millennia-old religious teachings, and many online sites have all emphasized the need of living within your means. Even while it seems to be simple, many individuals do not follow through, as shown by the fact that eight out of ten Americans are in debt. For a number of reasons, people are unable to grasp the notion, including the following:
- Spending more than their income allows—The most typical financial blunder is simply spending more than one earns, which leads to debt accumulation over time.
- Trying too hard to keep up with the Joneses—In a consumerist culture, conspicuous consumerism, defined as the buying of luxury goods and services in order to publicly demonstrate economic strength, is common.
- Relying too much on credit—Loaning money allows people to live above their means for a short time. Borrowers who are unable to return the borrowed monies on time, on the other hand, would almost likely find themselves in financial difficulty.
- A lack of knowledge—Not everyone is expected to be an expert in personal finance, and ignorance or a lack of understanding may lead to people living over their means. As a result, understanding more about personal finances may be advantageous.
Planning for the future
Budgeting and forecasting are very important components when aiming to meet certain financial goals, which is why many firms have whole departments dedicated to budgeting and forecasting. Individuals may benefit from this strategy as well, since achieving personal financial goals without first planning for them may be challenging.
Using the best estimate income and expenditure projections, proper planning may help anticipate future financial position. Choosing the right insurance options Proper planning may also aid in:
- mitigating unanticipated disasters (everyone faces both expected and unexpected life occurrences);
- stocking up on emergency savings
- weathering periods of high debt
- Getting ready to buy a new home, vehicle, or other significant purchase.
- Investing wisely
- Planning for retirement, children, or education
- Getting ready to buy a new home, vehicle, or other significant purchase
Individuals with a personal budget may be able to live within their means while still planning for the future. The Budget Calculator evaluates the many aspects of a personal budget and determines which areas need improvement.
Budget Template
We’ve created a free, basic budget template for anyone who want to start organizing their own finances on a monthly basis.
While it isn’t the most feature-packed budgeting application on the market, it was created to assist users get motivated and started on their budgeting goals before going on to more complicated budgeting tools.
It may also be used to annualize net income that has been calculated using our Budget Calculator. Also determined is the yearly expense-to-income ratio.
Use our Budget Calculator once a month to make changes to a stored version of our budget template. This will be reflected in the annual net income. Click here to get our free budget template.
Incomes
Salary or compensation from full-time or part-time job will be the principal source of income for the majority of budgeters. Investments and capital gains are the second most frequent source of income, but there are a range of other options to boost your income.
Everyone, of course, wants to make more money. A greater salary allows for more cost flexibility, in addition to more visible spending; a month of excessive spending may be quickly remedied with a high enough income.
While it is easier said than done, boosting one’s income may typically be accomplished by looking for a new job, gaining further education such as additional degrees or certifications, learning new skills, or networking with the right people. For certain budgeters, investment income may give a higher income, but this method only works in the long term. In certain instances, a second job may be essential to make ends meet.
For most retirees in the United States, Social Security is a substantial source of income. It’s important to remember that Social Security payments are only available when you’ve turned 62. Please use any of the calculators mentioned below for more thorough information or calculations.
- Take-Home Paycheck Calculator
- Income Tax Calculator
- Salary Calculator
- Social Security Expenses Calculator
Expenses
Housing & Utilities
The bulk of most people’s monthly housing expenses are made up of rent or mortgage payments. According to a general rule of thumb, housing costs should not exceed 30% of monthly gross income, give or take. Any budgeter who realizes that their housing costs are much greater should look into alternate cost-effective living choices.
Refinancing at a lower interest rate, relocating to a more cost-effective area, or, if possible, downsizing to a smaller home are all possibilities. If they have a spare room, they could consider renting it out for a profit.
Smaller ways to save on housing costs include switching to contemporary, smart equipment that is generally more energy-efficient, such as programmable thermostats, energy-efficient lightbulbs, and the installation of solar panels. Please use any of the calculators mentioned below for more thorough information or calculations.
- Household Affordability Calculator
- Household Mortgage Calculator
- Household Rent Calculator
Transportation
The bulk of budgeteers’ transportation expenses will most likely be the payment on their car or an auto loan. Because the selling prices of different cars differ so much, there is generally a lot of potential to save money. Choosing a vehicle within a given price range can go a long way toward meeting the financial goals of a budget.
As a general rule of thumb, monthly automotive costs should be less than 10% of total income. Other transportation expenditures include fuel, maintenance, and insurance.
There are a number of strategies for lowering transportation expenses. For one reason, depending on the location, owning a car is not always required, and there are alternative forms of transportation accessible. Instead, if possible, use public transit, carpool, bike, or walk.
These are not only budget-friendly, but also ecologically friendly, and some even provide exercise. Consider investing in a more fuel-efficient vehicle. If having a car is a requirement, regular maintenance may be beneficial in keeping the vehicle in good working order.
Things like correctly inflating tires, replacing the oil, and tuning the engine are examples of this. Additionally, make an effort to be aware Regarding traffic restrictions and driving correctly, not only may traffic violations result in fines, but they can also lead to an increase in auto insurance rates.
If you’re overpaying for petrol, you might consider changing your driving habits, such as accelerating quickly. As a general guideline, try to keep your entire transportation costs below 15% of your income. Please use any of the calculators mentioned below for more thorough information or calculations.
- Auto Loan Calculator
- Cash Back or Low-Interest Rate Calculator
- Auto Lease Calculator
- Gas Mileage Calculator
- Fuel Costs Calculator
Other debts and loans payments
People tend to spend more than they can afford using credit cards. Therefore they have a negative connotation when it comes to budgeting. It’s essential to keep in mind that credit cards aren’t endless and must be paid off on time to avoid incurring excessive interest costs.
Although credit cards have the potential to create debt, when used appropriately, they may be included in a budget as a way to save money on purchases and even develop good credit.
However, it is vital to use credit cards wisely, particularly for those on a low budget, to void paying exorbitant excessive and further straining budgets. Please use any of the calculators mentioned below for more thorough information or calculations.
- Credit Card Calculator
- Credit Card Payoff Calculator
- Debt-to-Income Ratio Calculator
- Debt Payoff Calculator
Expenses of Daily Life
While the expenditures of daily living may seem minor compared to the other categories, they may add up over time. “Meals Out” is a budget area with a lot of room for improvement. Cooking at home is generally less expensive than eating out, and depending on how often a person eats out, eating in more regularly might result in significant savings.
“Food” and “Meals Out” are included in the cost breakdown in the results. This total expense should not exceed 15% of gross income in general.
Healthcare
Each peso in the United States is worth one dollar.
Healthcare
In the United States, the average cost of healthcare per individual is $10,000 per year. Unfortunately, most budgets only have so much space for this expense. However, there are a few strategies that might potentially reduce healthcare costs:
- Give up smoking, eat a nutritious diet, get adequate sleep, and exercise regularly.
- Visit doctors, hospitals, and other institutions in your insurance network.
- Evaluate your health-insurance requirements on a frequent basis.
- Put money into tax-advantaged healthcare accounts. In the United States, this is known as a Health Savings Account (HSA).
- Purchase generic drugs wherever feasible.
- Seniors may rearrange their environment to reduce their risks of falling, which is one of the most common causes of high healthcare costs for the elderly.
Children and Education
Investing in one’s education is frequently referred to as the best investment one can make. Statistics show a close correlation between higher levels of education and higher income. This category is more likely to be about properly preparing for it than about reducing down.
Keep in mind that government-funded student aid is readily accessible in most developed countries, enabling anybody to pursue higher education regardless of their financial status. Those who have a number of high-interest student loans might consider consolidating them.
Having a child is one of the most costly (and time-consuming) expenses an adult can incur, so planning ahead is essential. Please use any of the calculators mentioned below for more thorough information or calculations.
- Student Loans Calculator
- College Costs Calculator
Savings and Investing
Excess money in a healthy budget is frequently saved or invested for the future, such as for retirement, emergency funds, or education savings. Budgeters should not overlook the importance of having an emergency reserve; it might be the difference between being in debt and not being in debt.
If one’s savings and assets are properly managed, it’s not uncommon for an average income person to retire at a younger age. As a general rule of thumb, the total of this section should be 15 percent or higher. Please use any of the calculators mentioned below for more thorough information or calculations.
- A 401(k) Plan Calculator
- Calculator for Roth Individual Retirement Accounts (IRAs)
- Calculator for Individual Retirement Accounts (IRAs)
- Social Security Calculator
- Retirement Calculator
- A Pension Calculator
- A Savings Calculator
Miscellaneous Expenses
This category of expenditure is frequently the most flexible compared to other aspects of a personal budget, such as housing or savings. It includes various expenses that blur the lines between “needs” and “wants.”
This provides for a great deal of personal discretion, which may be advantageous or disadvantageous. Excessive spending is terrible in the sense that it may damage a budget, yet moderation can ease stress and perhaps rebuild a budget. Important decisions such as whether or not to go on an expensive trip to the
The Maldives, whether or not to attend a local Super Bowl and whether or not it’s worthwhile to spend a lot of money on an art collection go a long way toward achieving financial goals.
Expensive vacations, beloved pets, and exciting hobbies are all terrific ways to invest in oneself, but only if one’s resources allow it. This section should be the first place anybody trying to fix a drooping budget should look.