Budget Calculator
A budget calculator helps you plan how to allocate your income across spending categories. The most widely used framework is the 50/30/20 rule: 50% of after-tax income to needs, 30% to wants, and 20% to savings and debt repayment.
Tip: Automate your savings on payday before spending. People who pay themselves first save consistently; those who save "what's left" rarely do.
- 1Calculate your monthly after-tax (take-home) income
- 2List all monthly expenses by category
- 3Subtract total expenses from income to find surplus or deficit
- 4Compare your actual spending to the 50/30/20 benchmark
- 5Adjust categories to eliminate deficit or boost savings
50/30/20 rule
Originally popularised by Senator Elizabeth Warren in "All Your Worth" (2005). Needs include housing, utilities, groceries, minimum debt payments. Wants include dining, entertainment, subscriptions. Savings includes emergency fund, retirement, and extra debt payments.
Zero-based budgeting
An alternative approach where every dollar of income is assigned a purpose. Income − all allocated spending = $0. Popularised by YNAB and Dave Ramsey's EveryDollar.
| Monthly Income | Needs (50%) | Wants (30%) | Savings (20%) |
|---|---|---|---|
| $3,000 | $1,500 | $900 | $600 |
| $4,000 | $2,000 | $1,200 | $800 |
| $5,000 | $2,500 | $1,500 | $1,000 |
| $7,500 | $3,750 | $2,250 | $1,500 |
| $10,000 | $5,000 | $3,000 | $2,000 |
Fun Fact
A 1% increase in your savings rate — just $50/month on a $5,000 income — compounds to over $75,000 extra over 30 years at 7% annual return.