A Quick Guide to Budget Planning
The majority of people have an approximate idea of their income. Very few are able to clearly see where it truly goes. Budgets break down because of this discrepancy between perceived and actual spending. The purpose of this planner is to close that gap.
Let us start with income. Include all of your sources of income, including your salary, freelance work, rental income, and any regular revenue. Enter the monthly amount and give each one a clear label. As you input the data, the total is updated.
Next, let us talk about expenses. Most people should slow down at this point. Go line by line instead of adding rent and calling it a day: food, transportation, utilities, insurance, gym memberships, and subscriptions. The ten minor categories that no one considers listing are usually the ones that cause problems, not the large, obvious ones.
The formulas are simple:
Balance = Total Income − Total Expenses
Savings Rate = Balance ÷ Total Income × 100
Expense Share (%) = Single Expense ÷ Total Expenses × 100
It is important to pay attention to the donut chart at the bottom. It divides your spending into proportional chunks, and it is often the first time people discover, visually, that one item is consuming 40% of their budget without their awareness.
It makes sense to aim for a savings rate higher than 20%. There is virtually no room for anything unforeseen below 10%. You can quickly determine which zone you are in by looking at the balance value in the header.
To save a snapshot or monitor changes on a monthly basis, download the PDF.