A free and interactive online budget calculator and budget planner to provide insight into your actual spending and expenses. Understanding and managing your expense budget provides an important basis to your future wealth development, including your strategic investment and savings opportunities.
The Budget Planner Calculator
The Budget Planner Calculator is a free tool for anyone who wants to take their personal finance to the next level. One of the most important aspects of managing your money is knowing where your money is going.
Have you ever found yourself at the end of the month, looking at your bank balance, and asking yourself: Where has all my money gone? Use our free budget planner to clearly see where your hard-earned money has been spent.
The budget calculator is designed to give you a clear visual representation of your monthly equivalent expenses. The different categories provide an accurate indication of what your money is spent on most. The categories include your essentials such as Groceries, Home Rent, Fuel & Transit, Vehicle Lease and Personal care. Other categories (where most of your disposable income is likely going) include Entertainment, Vacation & Travel Expenses and more.
Using the budget planner, you can compare your spending on discretionary costs (which are costs non-essential to your livelihood) and then essential costs. This provides you with the perfect opportunity to consider how you can improve your spending, and work towards your long-term wealth.
Depending on your lifestyle and situation, different categories can be classified as essential or non-essential. Use your best judgment in your situation to what you deem essential or non-essential.
Using the Budget Calculator
The Input section lists the different categories. Add your monthly costs (or yearly costs if asked) into each relevant category and let the budget calculator do its work. Scroll to the top to see your results.
If you don’t know what you are currently spending on a monthly basis, the best way to find out is to take your last three to six months bank statements (including credit cards and store cards) and spend some time categorizing every outflow or payment into the categories as per our Budget Planner.
Add the total per category and then divide this total by the number of months you used. For example, if you’ve spent a total of $1,200 on Recreation in the past six months, your monthly cost for recreation is $200 ($1,200 / 6 = $200). Repeat this for every category.
Take your time to analyze every transaction. The best way to truly take control of your money and plan a smart budget is to understand what your current spending patterns are.
Why You Should Budget
During a budget planning exercise, you’ll soon start to realize that there are certain places and/or purchases that repeat frequently and therefore result in a higher monthly cost than you might think.
In most cases, when you don’t know where your money is going, it means that you are spending too much on purchases that might not be essential to your living, or does not bring you as much satisfaction as you thought.
Budgeting, with the help of a tool like our free budget calculator, provides you with the opportunity to take control of your spending, and choose from the start of every month, where you want your money to go.
Once you understand how you are currently spending, you can start making changes to widen the gap between your income and expenses. This gap can be used to pay off debt and invest, to build a better future. The budget planner gives you the power to choose a better future.
How to Budget
Once you understand where your money is going, it is time to sit down and think about how you want to spend your income. If you want to increase your available funds at the end of the month, you either need to increase your income or reduce your expenses.
For most, a reduction in expenses is the fastest, as it may take time to find a higher paying job, or increase your skills to negotiate a raise.
To budget your expenses, you need to determine what you want to spend on essential costs (food, housing, transport, etc.). The best starting point is to take what you are currently spending. Although there are always ways to reduce your spending on essential costs, it is usually not where most of your reduction in expenses can occur.
The next step is to determine what you want to put away each month either into paying off debt or investing your money. A good rule of thumb is between 10% and 30% of all your income. This allows a consistent flow into your wealth building journey.
Lastly, take what is available and spend it on what brings you joy or improves your lifestyle. This allows a clear and comfortable spending budget on discretionary costs. The amount available is determined as follows:
Discretionary Spending = Income - Essential Costs - (Debt & Investments)
For example, if you have a monthly income of $3,500 (after tax), essential costs at about $2,000, and choose to put away 20% of your income into debt/investments, your discretionary spending will be as follows:
Discretionary spending = $3,500 - $2,000 - $700 [$3,500 X 20%]
Discretionary spending = $800
This ensures three vital aspects of spending: 1) your essential living costs are taken care of, 2) you are putting funds away consistently for your long-term wealth, and 3) you can comfortably spend on joys and entertainment without the risk of going into debt.
Important Things to Think about When Budgeting
Put yourself first when planning your budget. This is why you need to consider your essential costs first, followed by your wealth-building journey. By setting up your budget to put yourself first, you guarantee a steady flow of assets to build your wealth (by paying off debt and investing wisely).
Discretionary spending is also important for your enjoyment in life, however, if this is left unchecked, most often this results in high credit card debt and no investments - which is not beneficial to your long-term wealth and financial independence.
Be honest with yourself and your spending, if you know that you can shop smarter on your groceries, or transport, do so. Remember that your budgeting journey is to allow yourself room for your needs, wants, and future wealth.
Now use our free budget calculator above as a first step to understanding your spending, and planning for your wealth.