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El Cerebro

Saving and planning

Monthly budget

How much money is left at the end of the month when the fixed and variable expenses are subtracted from what comes in, with the share that represents the balance and its equivalent over twelve months.

What it does

It subtracts the fixed and variable expenses from the month's net income and gets the balance. It adds the two expenses together to show the total that comes out, divides the balance by the income to get the rate, and multiplies the balance by twelve to read it as an annual amount.

That is all: one subtraction, one addition, one quotient and one multiplication. The account does not decide for you, does not compare you with anyone and does not ask for your personal details.

Key concepts

  • Net income: what comes in after taxes and deductions, not the figure on your payslip. A budget built on the gross overestimates the available margin, and that difference shows up precisely in the balance.
  • Fixed expenses: those that do not change from month to month —rent, utilities, instalments, subscriptions—. It is the part that is still there even if a month comes out odd.
  • Variable expenses: those that change with habits and with the calendar. Mixing them in with the fixed ones blurs the difference between what has to be paid and what can be put off.
  • Balance: income minus the two expenses. It can be negative, and when it is the account shows it as it stands: a zero next to expenses that do not come out of zero would be false data.
  • Balance rate: the balance divided by income, as a percentage. It is a proportion of what is left over what comes in. It is not a savings rule or a suitability criterion: there is no good or bad value, there is a figure that describes your months.
  • Annual equivalent: the balance multiplied by twelve. It is an arithmetic projection under the assumption that all months are alike, not a forecast: a high expense in one month says nothing about the next.

Frequently asked questions

How is the balance calculated?

By subtracting the fixed and variable expenses from net income. With 2.000 € of income, 800 € of fixed expenses and 450 € of variable ones, the balance is 750 €. It is a subtraction because a month is, exactly, what comes in minus what goes out.

What happens if the balance comes out negative?

The calculator shows it as negative, with its sign and its absolute value. With 1.500 € of income, 1.350 € fixed and 450 € variable, −300 € a month and a rate of −20 % appear. It is not clipped to zero: a zero next to expenses that are not zero would be an account that does not add up and yet would still look empty.

What happens if I have no income?

The balance is calculated the same way and comes out negative, because the expenses exist even if no money comes in. The rate, on the other hand, comes out as "n/a" and the label says why: without income there is nothing to divide by. No 0 % is shown: that 0 % would assert that zero has been spent when in reality nothing came in.

What is the balance rate and what does it not say?

It is the balance divided by income, as a percentage: with 2.000 € of income and 800 € of balance, 40 %. It describes the share of what comes in that is left over each month. It is not a savings rule, not a goal and not a suitability criterion: 10 % and 60 % describe different situations, not a good one and a bad one.

Is the annual equivalent a forecast?

No. It is the monthly balance multiplied by twelve, under the explicit assumption that the twelve months of the year are like the one you typed. A month with an extraordinary expense, an extra payslip or a quarter of work does not repeat: that is why the annual figure carries "12 equal months" written next to it.

What is the difference between fixed and variable expenses?

The fixed ones are those paid identically every month, such as rent or instalments. The variable ones change with habits and with the calendar, such as the weekly shop or the electricity. The account subtracts them together, but separating them is useful for knowing which part is still there when a month goes badly and which part can be put off.

What limits do the fields accept?

The three amounts run from 0 to 10.000.000 €. Zero is a valid value: typing 0 means that quantity does not exist, not that it was left blank. An empty field, a negative number, a value that is not a number and an amount above the maximum are rejected with a warning in the field, instead of turning into a 0 that the account would accept as valid.

Where are my numbers stored?

Nowhere. The calculation happens in the browser, with the three numbers you have just typed, and they are not sent anywhere, not stored on the device and not included in a link for sharing. You can close the page and the numbers go with it.

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