How to Use a Budget Calculator to Take Control of Your Spending

How to Use a Budget Calculator to Take Control of Your Spending

Using a good budget calculator can help you save money and pay off credit card debt while also being a precise tool for analyzing your finances. It’s a great way to get a more complete picture of your monthly finances, offering insight into where to cut back.

There are lots of budget calculators out there, and even though using one may seem daunting to many people, it’s actually easy to use a budget calculator and take control of your spending.

Here are the steps you need to take to start using a budget calculator.

1. Gather all your monthly income sources

Most budget calculators start with asking you to input all your sources of monthly income. You should include your main source of income as well as any other sources of cash flow you may have.

The main source of income is typically your salary after taxes (net salary) and supplementary sources of income often include alimony checks, freelance payments, child support and investment payouts.

2. Add all your expenses

The second step is to add all your expenses to the calculator. You should include all the money going out of the household here. Some of the expenses may be fixed and others may be variable.

Many budget calculators have separate fields for expenses, and typically they include the following:

  • Housing — your mortgage or rent
  • Food — include both your groceries and eating out. If you have any food subscriptions, include those as well.
  • Transportation — include all car expenses such as gas, insurance, and auto payments, plus any tickets or pass subscriptions if you use public transport.
  • Credit card and loan repayments — include the minimum you have to pay on your credit cards and loans, as well as an estimate of any extra payments you make.
  • Insurance — include health and dental insurance if you’re paying for it yourself.
  • Pets — all pet-related expenses, including insurance and veterinary bills
  • Child care — school fees, daycare and babysitting costs
  • Other expenses — all other personal expenses, from clothing to haircuts to trips.

3. Add your savings contributions

In this section, you’re typically asked to include your emergency savings, retirement contributions and other investments.

Once you have included all the information above, the budget calculator will show you whether you have some wiggle room in your budget or you’re overspending. A budget calculator makes it easy to visualize your finances and can help you making the right financial decisions.

For a budget calculator to help you as intended, you should get as organized as possible and record all your expenses so you know where you can cut expenses.

Building a household budget is vital for the future of your personal finances. An online budget calculator or a budgeting app makes it easier to crunch the numbers and make the most of your money. It’s always a good idea to know where your money is going every month so you can avoid taking on too much debt and avoid overspending.

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