- Add yearly salary to any other sources of income. Divide this number by 12 to calculate anticipated monthly income.
- Add up necessary payments. These include but are not limited to:
- Loan payments
- Insurance (home, life, medical, dental)
- Retirement Plan (at least 10% of salary/month ideally)
- Credit Card Payments
- Taxes (up to 34% of income/month)
- Subtract payments from monthly income. This is the amount left for expenditures.
- Calculate living expenses. These include but are not limited to:
- Housing
- Utilities
- Food
- Transportation
- Clothing (including dry cleaning)
- Investments and savings
- Personal Expenses (Entertainment, vacations, personal care, etc…)
- Subtract 4 from 3. This is how much money is left for saving or spending.
