A Monthly Budgeting Calculator to Help Take Control of Your Finances

Are you struggling to keep your spending below your income? Do you strategize about how to increase your savings? Our free budgeting calculator will help you save time and avoid mistakes when you need to understand where your money is going every month.

How the Budgeting Calculator Works 

To use our free budgeting calculator, just enter your monthly income and expenses. We’ll show you what percentage of your income you’re spending (or saving) in each category and whether you’re living within or beyond your means.

Budgeting Calculator Results Explained

The output from using the budgeting calculator shows the percentage of your income that goes toward each category. Seeing the results in pie-chart form makes it easy to tell where most of your money goes. It breaks down your total monthly income and total monthly expenses, while displaying the percentages of your income that are spent in specific areas. And it shows the total remaining monthly funds after all those expenses are accounted for. The bigger the gap, the more extra funds you may have.

Key Components of a Budget Calculation

The categories below offer a basic framework that you can use to organize your expenses and think about the amounts that might be reasonable for you in each category. Everyone’s finances are different, and this calculator is a tool to help you, so use it in the way that makes the most sense for how you think about your money. You don’t have to allocate your expenses exactly as we describe.

Start by filling in the Budgeting Calculator with your real expenses. If some are uneven (you buy more clothes some months than others), do an annual average. Take a screenshot of the results. Then see how you can improve your Remaining Monthly Funds by adjusting expenses that are discretionary—what budget experts call "wants." Where are your savings opportunities?

Total monthly income

Make sure to use your after-tax income for the whole family here—your budget is about the money you have available to spend. This should include your income from wages and salaries, gig or part-time jobs, bonuses, child support, alimony, tips, Social Security, distributions, settlements, and any other sources of income.

Housing

Four walls, a floor, and a roof comprise most people’s biggest expense. A common rule of thumb is to limit housing costs to 30% of your income. For many households this is a challenge: Harvard’s Joint Center for Housing Studies considers a household “moderately cost-burdened” when housing costs 31% to 49% of income, and “severely cost-burdened” when housing takes up 50% or more of income. In 2019 about 30% of U.S. households were cost burdened. Include your rent or mortgage payment in this category as well as renter’s insurance or homeowners insurance. Homeowners will also include any maintenance fees in this category.

Electricity, natural gas, water service, trash pickup, and the like get added together and go into this category. It can be hard to make a dent in these monthly bills without significant changes to your energy use, and some of those changes require up-front investments that take a long time to pay off, such as energy-efficient light bulbs, appliances, and heating and cooling systems. Caulking and weather stripping to seal gaps around doors and windows is one of the simplest and most cost-effective ways to achieve savings here, even if you’re not handy and on a tight budget.

Line items like property taxes or homeowners association feeds can fill in the other area, including any other housing-related costs that need to be counted.

Food

In this category add your essential groceries for the whole family. Add in any prepared meal kits and restaurant meals. Don't forget to account for takeout deliveries.

Transportation

The average household spent $10,742 on transportation in 2019, according to the U.S. Bureau of Labor Statistics. The average income before taxes was $82,852, meaning the average person’s transportation spending takes up 13% of their income. In this category, you’ll include costs such as public transit, car payments, auto insurance, parking, tolls, and gasoline or fuel. If you use taxis and ride-sharing services, be sure to add those into the Other line item, along with any additional transportation expenses.

Education

Many people have no education expenses. Others are funding their children’s (or grandchildren’s) education or paying back student loans. There’s no rule of thumb for the percentage of your budget that should go toward schooling. Good options for keeping these costs down include creating a 529 savings plan and refinancing private student loans.

Personal and family

If you have dependents, include expenses here that you haven’t already included in other categories. These might be costs for cellphone bills, clothes and shoes, household supplies, and vacation planning funds. Do you spend money on entertainment? Account for streaming services, museum and fitness memberships, and tickets to events in this section. Personal care (haircuts, toiletries, manicures) and pet care (vet visits, pet food, pet insurance) can also go in this category.

Debt payments outside of mortgages and student loans should go in this section. This involves adding together credit cards and personal loan payments. Add in costs such as childcare, adult daycare, tutoring and lessons, and charitable donations into the "other" section.

Health care

Medical, dental, and vision care insurance premiums, deductibles, and coinsurance or copayments should go in this category, along with any medications (prescription and over-the-counter ones) and medical devices you use. Your premiums will be the same every month, but the other expenses can fluctuate depending on whether you get sick, need a health screening, require new glasses, or something else. Use past spending or make your best guess at your annual cost in this category, then divide by 12.

Savings and investments

If your income allows, a good rule of thumb is to allocate 20% of your income to savings and investments. In addition to keeping cash in the bank for emergencies, you should funnel money into a tax-advantaged retirement account for investments. If you’ve covered those bases, you might allocate extra money to a college savings account, save for a downpayment on a home, or funnel money to a taxable brokerage account where you hold tax-free or low-tax investments, such as municipal bonds and Treasury securities. You can use the Other section for any additional savings goals you might have.

Budgeting Techniques and Philosophies

Here are some methods other people have found helpful to think about when creating a personal spending plan. Would one of these work for you?

50/30/20 method

This method says you should aim to spend roughly 50% of your income on needs, 30% on wants, and 20% on savings and investments. If you live with your parents or have a paid-off mortgage, you might spend less on needs and more on wants and savings. If your housing takes up 50% of your income, you’ll have to spend less on wants and possible savings. You can adjust the percentages to suit your situation; the idea is to take a big-picture approach to your spending instead of nitpicking every category.

80/20 method

In this method you save and invest 20% of your income, then spend the other 80% however you want. It’s an even simpler method than the 50/30/20 method. It can work well for people who don’t have the time or desire to make a detailed accounting of their expenses. You can change the numbers to achieve your own savings goals. People who want to achieve financial independence and retire early—or those who are trying to catch up on retirement savings later in life—might use a 70/30, 60/40, or 50/50 split.

Zero-based budgeting

A zero-based budget assigns a purpose to every last dollar of your income. When you subtract your savings and expenses from your income, the result will be zero. It’s helpful for people who prefer something more detailed than the 50/30/20 or 80/20 methods. If your income and expenses are complicated (for example, you have multiple, variable sources of income and more than 100 expenses per month), this method may be too time-consuming for you.

The envelope system

If you use this budgeting system, you’ll allocate a specific amount of money to each budget category at the beginning of the month. Once you’ve spent what you’ve allocated to a category, you’re done for the month, unless you can move money out of another category. For example, if your electric bill is $100 and you only put $80 in your literal or figurative electricity envelope, you’ll have to take $20 out of the grocery envelope (or some other envelope). 

The envelope system is a good method for people who are on a tight budget or trying to stop overspending. It originated with the idea of literally putting cash in envelopes, but you can keep your cash safely in the bank and use software or a pencil and paper instead.

It's easy to get off track if you don't follow a budget once you make one. Tech tools for budgeting can help make tracking a budget easier—even fun. Find a budgeting app or budgeting software that you find easy and helpful to use.

Benefits of Using a Budget

Budgeting adds one more thing to your to-do list, and who has time for that? You should, because the extra time and effort it takes to use a budget are worth it. For the skeptics, here are four main benefits derived from budgeting.

  • Benefit 1: Maximize your returns from working—You probably spend 20 to 50 hours a week earning money. If you’re not spending and saving consciously and carefully, you’re not getting the maximum benefit from the time you spend working. That means you’re probably going to spend even more time working and less time enjoying friends, family, hobbies, and sleep.
  • Benefit 2: Gain a sense of control—It’s easy to feel like expenses are happening to you, especially if money is tight. Planning your budget at the beginning of every month can make you feel like you’re choosing where your money goes. It can also help you see where you might be able to make room for saving more or paying down debt faster, so that unexpected costs become less likely to set you way back.
  • Benefit 3: Achieve your goals—You might have a goal of traveling to Tokyo, buying a car, or becoming a one-income household instead of a two-income household. Whatever motivates you, budgeting can help you get there by helping you set financial goals and prioritize where your money is going.
  • Benefit 4: Spot problems before they catch you off guard—When you create a budget, you’ll be able to see clearly that only having $30 left at the end of the month to put toward your credit card bill puts you at serious risk of being unable to get out of debt or lack the money you'll need to help put your kid through school. You might not be able to solve the problem immediately, but you could start taking steps in the right direction, whether it’s learning how to improve your credit score so you can refinance your debt at a lower interest rate or researching options for a less expensive education.