In this article, we explain how to use our budget calculator. We also outline what other budgets can look like in other homes for comparison purposes. Finally, we identify ways to plan your savings. In doing so, we highlight ways to use spreadsheets, tools and software to budget for your home.
How to Use the Home Budget Calculator
Using our budget calculator to manage your monthly expenses and income is easy. Importantly, it also helps highlight areas of weakness that you may not have been previously aware of.
Firstly, complete all entries that you can. Complete those entries in as detailed a way as possible. The more detail you include, the more you can zone in on areas that you can make savings.
To do so, it can be helpful to have your monthly income data on hand. Also, have any bills ready that you have to pay out of your monthly budget. Find the paperwork for the following:
- credit card bills
- charitable donations
- any debt payments
Finally, ask your partner for his or her income information too. It is there that you can both find how much you pay in taxes and any other income deductions.
Once you have gathered all the information, you can input it into the relevant fields in the calculator. When that is completed, you can then click calculate. The calculator will then take into account the following:
- Your mortgage payments
- Auto repayments
- All other home expenses
The calculator will then show how much of your income can be put into savings.
What Does a Typical Personal or Household Budget Look Like?
A personal or household income will be about weighing up a monthly income versus monthly outgoings. Some households may have to account for their income differently, according to how a person receives a salary.
For some, knowing their regular monthly income is tricky. For example, freelancers or those who run their own business. Plus, many of us will have different levels of outgoings each month.
This is fairly common across many homes. However, there will be many common outgoings from different households that are regular. For instance, the majority of homes will have a mortgage payment each month as well as owing a certain amount on a car loan. Childcare is also one of the most common, regular outgoings a household will have.
Areas, where outgoings differ, will be groceries, utilities and insurance payments. How much these costs are will vary according to the specific needs of a household. For example, some will be able to keep their food expenses low. For others with a larger family that will be difficult.
Ultimately, it is writing down your household budget that is crucial. It will highlight the areas where you spend the most amount of money. It is this knowledge that will provide you with the ability to save.
Planning Your Savings
Planning your savings by knowing your income and expenses is a big benefit to using our budget calculator. Building up savings over months and years can help you achieve a better quality of living in the future.
For starters, it can help provide a buffer if you lose your job, or it can be used as a deposit on a home. Finally, having made a budget to calculate your net income, you can help save for your retirement.
Building up that pot of money, however, is not something that enough Canadians concentrate on. Many come at savings from the wrong angle. People often only try to save out of what is left from their income after all their other expenses.
What can prove more effective is to look at your savings payments as an expense in itself. You are much more likely to have something to save if you pay into your savings account at the beginning of a month.
A calculator will help you budget how much is affordable to you, but doing so when you receive your salary is key. If you wait until the month’s end, you will likely find that that extra cash has been eaten up elsewhere.
Using Spreadsheets to Manage Your Home Budget
To use the budget calculator more effectively, you can use spreadsheets alongside it. If you record all your monthly income and monthly expenses into a spreadsheet, a budget calculator will be far more accurate.
Also, a spreadsheet can record the amount of your loans or your saving accounts. If you record the amount paid off on a vehicle or loan each month, you can see how much more you have to pay off. Logging how much you have saved into an account gives you a better understanding of your current financial status.
Yet, you can use your own spreadsheets alongside a calculator like ours. Our calculator has all the necessary calculations already built into it. As a result, it is accurate. Using your own spreadsheet to calculate taxes and interest can be helpful, but also prone to error.
If there are errors in your original calculations, it hard to know the amount paid towards certain expenses or credit cards. The result is an inaccurate forecast for the amount available for your saving accounts.
Tools and Software for Managing Your Home Budget
Managing your household budget is getting easier by the day. There are many tools and software packages available that allow you to make informed financial decisions. In addition to our calculator, you can use apps that help you know where your money is going and when.
Credit card and banking apps are a good place to start when trying to get to grips with your household budget. Many credit card firms allow customers to breakdown their monthly spending into type. As a result, you can quickly see how much you spent on food, clothing or gas. The same can be said about banking apps.
Other pieces of software record receipts and smaller expenses. All you need to do is take a photo of them with your phone. Software packages like Quickbooks will turn them into electronic data.
You can download the information gathered by these apps in one place. For many that will be a spreadsheet. From there, that information can be input into a budget calculator.
However, there are an increasing amount of apps out there that can record more than outgoings. There are also apps to help you get into the habit of saving. Apps like YNAB point out to users where their financial management is lacking.
Using apps can also help Canadians grow nest eggs through investments. Many investment companies will have software to help with your overall monthly budget. Downloading an app for an investment firm you use can allow you to see how much your money has grown. It can help you identify how much it has grown over a month, quarter or year.
Finally, if you find it difficult to know when debt repayments need to be made, some apps can alert you to due dates. Paying debt repayments on time is a key way that you can minimize your future outgoings. Missing payments can rack up increased costs through more interest and penalties incurred.
The Bottom Line
Budgeting for your household can be a tricky task. Balancing monthly expenses versus your income can be overwhelming and complicated. However, you can make the process so much easier with our calculator. This is because it adds up all your income and expenses to come to a net income figure.
Knowing your net income can help you in the long term. You make better personal finance decisions and choose better home maintenance options. As a result, you will have more affordable monthly expenses, lower credit card payments and more in your savings.
Without fully understanding where your money is going, you cannot take control of your finances. You also need to know how it is being spent. If you don’t, you will constantly be making ill-informed decisions. You will not be able to make changes to where to spend and where to save, which can have significant implications for your future.
For example, you may not have enough money saved for your retirement. Saving enough for retirement is something that everyone needs to do as early as possible. Using a budget calculator is a key way to do so. Learn to use it now, and you’ll make big savings in the future.