If you really want to take control of your finances, it’s important to compile a detailed list of where your money actually goes every year. The results may surprise you, but the truth will set you free. Note that in general, lenders expect your debt to represent 36 percent or less of your monthly pre-tax income. Use our Budget Calculator to help itemize major expenditures and lesser categories you might not have considered in previous budgeting exercises.
Budget Calculator Definitions
Mortgage payments or rent – The amount paid for your primary home each year, or the rent incurred in a year.
Vacation home mortgage – The amount paid toward your secondary home(s) each year.
Auto loans – The amount paid for outstanding car purchases.
Personal loans – The amount paid for other outstanding purchases.
Charge accounts – The amount paid toward credit card principal and interest.
Investments – The amount put into funds, property or other assets with the intent of earning profits.
Federal and state income taxes – The amount you expect to owe the government at after automatic income withdrawals.
Property taxes – Annual tariffs charged by counties, cities and schools based on your property values.
FICA (i.e. Social Security taxes) – Federal taxes paid annually on any Social Security benefits.
Utilities – Fees incurred for public services including telephone, electric, sewer and water.
Households repairs and maintenance – Money put into maintaining your home’s value.
Food – Annual grocery costs, including baby formula/food and excluding restaurant food.
Clothing and laundry – Clothing purchases for the whole family, plus dry cleaning and laundry costs.
Educational expenses – Including tuition for preschool or private school, professional development and college fees.
Childcare – Daycare and babysitter costs.
Auto and other transportation expenses – Gas, car maintenance and cleaning costs and fares for buses, taxis, trains and planes.
Life insurance premiums – Cost of insuring yourself or a loved one not covered by your employer.
Medical, dental and disability insurance – Cost of insuring yourself or a loved one not covered by your employer.
Medical costs – Health and wellness expenses, including counseling, that are not covered by insurance.
Entertainment – Dining out, cable or satellite TV charges, movies, books, etc.
Recreation and travel – Lodging, food, entertainment and other expenses associated with vacation; leisure-time activities; and business travel costs not covered by your employer.
Club dues – Costs associated with belonging to health, social or athletic clubs, interest groups and other organizations.
Hobbies – Costs incurred while engaging in various leisure-time activities.
Gifts – Expenditures for birthdays, Christmas, Valentine’s Day, etc.
Home improvements/furnishings – Separate from home maintenance, this covers remodeling, redecorating and other optional costs.
Charitable contributions – Includes donations to churches, schools, foundations, Scouting groups, kids’ athletic and musical groups and other organizations.