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How to Use a Budget Calculator to Manage Expenses

A good budget calculator can be an immense help for financial consumers struggling with excess spending and debt.

There’s good news on the household finance front – but there’s also a huge caveat attached.

On the upside, eight in 10 Americans now engage in household budgeting in 2020, according to a recent survey by

That figure is up from seven out of 10 U.S. adults having a household budget from 2018, reports.

On the downside, the cratering U.S. economy due to the ongoing coronavirus crisis has many Americans rolling up their budgets and throwing them out the window. That’s because the pandemic has millions of U.S. financial consumers recalibrating their budgets after job loss or furlough, illness, or reduced hours on the job leading to lower incomes.

No matter where you stand financially these days, creating and maintaining a household budget is no luxury – it’s a necessity.

Fortunately, there are abundant digital resources out there that can help Americans build a personal budget they can rely on, again and again.

One of the most valuable financial tools consumers can use to create a working household budget is a budget calculator – usually found online.

What can a budget calculator do for you? Read on and see how a good budget calculator can pave the way for more savvy household financial scenarios.

Benefits of a Budget Calculator

The chief benefit of a budget calculator is that by using it regularly, you see the upside of saving more and spending less.

Alternatively, you can experience the shock value of using a budget calculator to see how excessive your spending habits are, and how weak your personal savings campaign is. At that low point you can start taking the action steps needed to rebalance your household budget, and save more cash in the long run.

Chances are, you’ll feel better by doing so.

According to a 2019 study from the Washington, D.C.-based CFP Board, “most people acknowledge budgeting gives them benefits like control, confidence and security.”

Additionally, having a household budget positively effects a consumers’ emotional state by reducing stress, anxiety and frustration, the CFP Board states. Consumers who have a budget feel "more in control" (62%), "more confident" (55%) and "more secure" (52%), the study noted. Whereas consumers without a budget are more likely to feel "not in control" (19%), "worried" (18%) and "stressed" (17%).

“There is a desire to have control over their money, but many are struggling to do so. A budget would help increase their feelings of control, confidence and security while at the same time reducing their anxiety.”

Budget Calculators Best Practices in 2020

Building a household budget using a calculator is really no different substance-wise, than using pad and paper (it’s just abundantly easier.)

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The goal is to add up your incoming cash and your outgoing cash and subtract the latter from the former. Whatever cash is left on the bottom ledger is the money you have to live on for a month (usually).

Structurally, using a budget calculator to create a household budget is fairly straightforward. For instance, by inputting household income and monthly expenditures, consumers can see how much cash they need to save and how much money they’re spending. Any good budget calculator can also point to areas of needed improvement (like dining out too much or spending too much money on travel and leisure.)

To get going, choose from the long list of handy online budget calculators (just  Google “best budget calculators” and choose the one that works best for you.) Once you’ve selected a digital budget calculator, take these action steps:

Get your budgeting line items in order. The elements for any good budget calculator include line item personal finance areas you need to cover – and that any good online budget calculator will require. These elements are divided into two areas – income and expenses. Here’s a closer look:

Income – i.e., money coming into the household.

Net income. This is your household salary – individual or combined – after subtracting taxes.

  • Net income. Your primary job's salary, expressed monthly, after deducting taxes.
  • Extra income. This is income you’ve earned on the side on a monthly basis, like rental income or money earned from a side gig, like driving for  (UBER)  or selling items on Amazon  (AMZN) .
  • Money earned from savings and investing. This is income earned on personal assets like bank accounts and investment accounts.
  • Pension. This is income earned on any retirement funds received once you’ve retired.
  • Ancillary income. This is money received outside of work or savings. Examples include cash gifts, inheritance money, gambling and lottery income, allowances, child support and other cash subsidies.

Expenses – i.e., money going out of the household

  • Mortgage or rent. This is the amount, expressed monthly, paid toward a mortgage or rent
  • Food, drink and consumer staples. This is the amount of money spent every month on groceries an household goods.
  • Utilities. This is the cash spent on household utilities, like electricity, water, phone and internet, among other expenses.
  • Credit card debt. This is the amount of money spent covering monthly credit card bills.
  • Transportation and auto maintenance. This is the money spent on gas, maintenance, and tolls on your vehicle. It also includes expenses like bus or train fare, air travel, or other modes of transport (that’s almost always job-related.)
  • Bank loans, auto loans, and student loans. Aside from your mortgage or rent, these are likely the biggest expense items you pay every month.
  • Insurance bills. This line item expense covers insurance payments – think health, auto, small business, or even renter's insurance.
  • Miscellaneous Expenses. This is the amount of cash needed to cover monthly bills for unexpected costs, like health care bills, household appliance maintenance, tax bills, computer repair, or other unforeseen expenses.
  • Dining out/recreation/vacation. This is the money needed to cover household recreational and “fun” expenses, like eating out at restaurants, vacation stays, golfing and other recreational sports, and hobbies.

Once you have input this information into the budget calculator (the formula here is income minus expenses equals budget number), the calculator will do the heavy lifting for you and provide your monthly budget number based on your income and expenses.

Setting goals. Once you have your monthly budget figure locked down, you can start the real process of household budgeting by estimating what your ideal budget might look like and taking the savings and debt reduction steps needed to meet that goal.

For example, if you have $5,000 in monthly income and $4,000 in monthly expenses, you have $1,000 leftover to live on. But what if you could slice another $1,000 in expenses by eating out less, driving a smaller and more economical vehicle, and paying down credit card or student loan debt?

That would bring your remaining household budget assets to $2,000 and give you the freedom to pay down more debt, save for college or a new home, create or boost an emergency fund, or stash more money away for a child’s college education.

Online budget calculators are growing more advanced all the time. Many now have features that enable you to track spending and debt, and have more long-term tools that allow you to plan a household budget savings campaign for a year or longer. Take advantage of these budget calculator features and combine the with mobile budgeting apps that give you a financial blueprint to live by – now and down the road.

The Takeaway on Budgeting Calculators

If you’re living alone, budget calls are easier decisions to make.

If you’re married or living with a partner, make sure to sit down beforehand and agree on budget and savings objectives, and then abide by them. Prioritize debt payment strategies and agree on where money saved using your budget calculator should go.

Then, review your new household budget monthly and adjust your savings goals as needed.

Building a good household budget is critical to long-term personal financial success. A good, solid online budget calculator makes that process significantly easier, and can help you lay the number-crunching groundwork for a prosperous financial future, for you and your family.