You can make budgeting simple by following a budget calculator. These days all of us have to keep a tight restriction on our household expenses. One of the ideal ways to keep control of your money is to use a budget calculator. This will help you greatly to see where your finances are going and where you could be able to make savings.
Make Budgeting Simple
Budget Calculator is probably a good idea to collect your last twelve months bank statements to ensure you don`t forget to include all your quarterly and annual bills. And Put together the records of all your income, including money coming in from your investments and interest on savings.
Your expenses fall into various categories – some are not avoidable, some are discretionary, and others are unexpected. Your unavoidable expenses include things such as food, rent, electric and gas. Discretionary expenses are things such as a day at the spa or eating out. Unexpected expenses include things such as a new boiler or repair of an essential household appliance.
When you have got your paperwork to hand, it`s time to find a budget calculator. There are a number of budget calculators on the internet; have a few and see if there`s one suitable for your needs.
If you can`t find anyone that looks right for you, you may set up a personalized one on a spreadsheet. Go through your bank statements and use it as a guide to making a list of your entire monthly, quarterly and annual bills.
Add one-third of quarterly and one-twelfth of the annual bills to your monthly column. Next, list all your monthly income in the same way. Then transfer the information to the budget calculator of your choice and see where your money is going.
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Go through your discretionary expenses also and see if there`s anything you may do without – eating out once a month rather than once a week, walking to work instead of using the car every day or taking a packed lunch rather than going to the café. If your budget calculator shows that you don`t appear to be able to live within your budget, don`t be discouraged – there are other steps you can take.
Fine-tune your budget. Firstly, your mortgage – you have various options here. You may increase the term of your mortgage, making your monthly payment lesser. You may take a further advance and use the money to settle your much more expensive credit cards – It`s important to get rid of your most expensive debts first. Next, check that you`re with the cheapest suppliers for telephone, gas, electric and internet – It`s not much problem to switch and you may save a lot of money.
Food shopping – regularly make a list, it`s very simple to pick up things you don`t really need. Think about buying different brands if they are cheaper, rather than just picking up the one you usually get. You will discover that fruit and vegetables are generally cheaper from a greengrocer or market – and you have more advantage of only buying what you want (rather than a pack of three lettuces for example).
Here is how to determine your spending using a budget calculator
Adopt the 50/30/20 Budget rule because it`s considered to be the best way to spend your money responsibly.
Use the calculator to estimate how you should divide your monthly income into wants, needs and savings. How do you do this?
The 50/30/20 budget basically divides your take-home income into three classes and weights them as follow 50% for necessities, 30% for wants and 20% for savings and debt repayment. Here`s how you break it down:
Monthly after-tax income
This is your income after taxes have been deducted and cost of payroll deductions for either health insurance, contributions or other automatic savings have added back in.
50% of your income: necessities
Necessities are simply the expenses you can`t avoid. This part of your budget should cover costs like:
- Basic utilities
- Childcare or other expenses that require to be covered so you can work
- Minimum loan payments. Anything above the minimum goes for savings and debt repayment bucket.
30% of your income: wants
Differentiating needs from wants is usually not easy and can vary between various budgets; though wants are the extras that are considered nonessential to living and working. They are normally for fun and could include:
- Meals out.
20% of your income: savings and debt.
Savings is the actual amount you sock way to prepare for the future. Commit this chunk of your income to clear existing debt and creating a comfortable cushion to escape taking on future debt.
How exactly to use this portion of your budget depends on your situation, however, it will likely include:
- Starting and growing an emergency fund.
- Saving for retirement through contributions or an individual retirement account.
- Paying off debt, starting with the toxic, high-interest type.