Budget Calculator Formula & How It Works
Surplus/Deficit = Total Income − Total Expenses | Savings Rate = (Surplus / Income) × 100%
- Fixed expenses: rent, EMI, insurance (don't vary month-to-month)
- Variable expenses: food, utilities, entertainment (fluctuate)
- Savings rate: percentage of income saved
- 50/30/20 rule: 50% needs, 30% wants, 20% savings
A budget is a plan for your money. List all income sources and all expenses. Subtract total expenses from income to find the surplus (positive = you're saving; negative = you're spending more than you earn). The savings rate shows what percentage of income you're saving. Financial experts recommend saving at least 20% of take-home income.