80/20 Budget Calculator

Definition

80/20 Budget Rule: The 80/20 budgeting rule also known as the "pay yourself first" budget or the anti-budget is a simple financial plan that helps you to achieve and maintain financial stability without tracking your spendings.

The 80/20 rule of thumb for budgeting states that, you put 20% of your take home pay (income after taxes) into savings and spend the remaining 80% to fulfil your needs and desires.

How to use this calculator?

1. Enter your take home salary (income after deducting taxes, health insurance premiums etc.) in the income input field.
2. After entering your monthly salary, this calculator will display the needs (80%) and savings amount (20%).
3. To start a new calculation, simply update your monthly salary. The other two expenses and savings fields will get updated in realtime.

Math formula

Benefits of 80/20 Budget

1. Simple in Nature - A perfect budgeting method for those who don't like tracking expenses.
2. Perfect Balance - You are free to spend the remaining 80% as per your wish. You can also save some part of this money if you want.
3. Consistent - Taking 20% of your income doesn't put any burden on you. Therefore, you can easily follow this method for a long period of time.

Example

Example 1: If your monthly salary is $2400/month. How much should you allocated under the 80/20 budget rule?

Take home salary = $2400/month

Therefore, you should allocate $480 to your savings & investment, and the remaining $1920 to cover your expenses.

Some Common Examples