Introduction
The 30/30/30 rule calculator is a helpful tool to determine your total income after tax (ATI). This rule simplifies budgeting by allocating your income into three categories: 30% for savings, 30% for wants, and 30% for needs. To calculate your total income after tax using this rule, follow the steps below.
How to Use
To use the 30/30/30 rule calculator, follow these simple steps:
- Input your total income before tax (gross income) into the calculator.
- The calculator will automatically apply the 30/30/30 rule formula to determine your total income after tax (ATI).
Formula
The formula used in the 30/30/30 rule calculator is as follows:
B = ATI * 0.30
Where:
- B represents the budget for wants.
- ATI stands for your total income after tax.
This formula will help you allocate 30% of your total income after tax to your wants, which include discretionary spending on non-essential items.
Example
Let’s illustrate how the 30/30/30 rule calculator works with an example:
Suppose your total income before tax (gross income) is $5,000. Using the formula:
B = ATI * 0.30
B = $5,000 * 0.30
B = $1,500
Your budget for wants (B) would be $1,500 under the 30/30/30 rule.
FAQs
Q: How do I determine my total income after tax (ATI)?
A: To calculate your ATI, you should subtract your estimated taxes from your gross income.
Q: What are considered “wants” under the 30/30/30 rule?
A: “Wants” include discretionary spending, such as dining out, entertainment, and hobbies.
Q: What are “needs” under the 30/30/30 rule?
A: “Needs” encompass essential expenses like housing, groceries, utilities, and transportation.
Conclusion
The 30/30/30 rule calculator simplifies budgeting by providing a straightforward method to allocate your income effectively. By using the provided formula, you can determine your budget for wants, ensuring that you maintain a balanced financial lifestyle.