Budgeting calculator

1 min readLast updated December 14, 2023by Charlie Barton

How to calculate a solid budget

Creating a budget is an important step towards financial stability and achieving your financial goals. Here's a step-by-step guide on how to calculate a budget:

  1. Determine your income: The first step in creating a budget is to determine your income. This includes your salary, any additional sources of income, and any other funds you receive regularly. This will help you establish a baseline for how much money you have coming in each month.

  2. List your expenses: Once you've determined your income, it's time to list your expenses. This includes your fixed expenses, such as rent or mortgage payments, car payments, and insurance, as well as variable expenses such as groceries, entertainment, and travel.

  3. Categorize your expenses: Once you've listed your expenses, it's important to categorize them. This can help you identify areas where you may be overspending and adjust your budget accordingly. Common categories include housing, transportation, food, utilities, entertainment, and savings.

  4. Assign amounts to each category: After categorizing your expenses, assign an amount to each category. Be sure to prioritize your essential expenses, such as housing and utilities, before allocating funds to other categories.

  5. Subtract your expenses from your income: Once you've assigned an amount to each category, subtract your expenses from your income to determine your net cash flow. This will give you an idea of how much money you have left over each month after paying your bills.

  6. Adjust your budget: If your net cash flow is negative, you'll need to adjust your budget to reduce expenses or increase income. Look for areas where you can cut back on spending, such as eating out or entertainment. If necessary, consider finding ways to increase your income, such as taking on a side job or negotiating a raise.

  7. Monitor and adjust your budget: Creating a budget is just the first step towards financial stability. It's important to monitor your spending regularly and adjust your budget as necessary to stay on track towards your financial goals.

By following these steps, you can create a budget that works for your individual financial situation and helps you achieve your goals.


Charlie Barton

Charlie Barton is a writer at Unbiased. He has been writing about personal finance and investing since 2017, with extensive knowledge of platforms and products. Charlie has a first-class degree from the London School of Economics.