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Family Table Math
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Budgets

A budget is a plan for your money: how much comes in, and where it goes. It helps you pay for what you need, enjoy some of what you want, and still save for the future. Budgets change when life changes, so on this page you’ll learn to read a budget, build one, and adjust it with good reasons.

Key ideas

Section titled “Key ideas”

The parts of a budget

Section titled “The parts of a budget”

Most budgets are planned monthly.

  • Income is the money coming in: pay from a job, an allowance, or money from a side business. Use take-home pay (also called net pay), the amount left after deductions such as income tax.
  • Fixed expenses stay the same each month: rent, a phone plan, a monthly transit pass, a streaming subscription, insurance.
  • Variable expenses change from month to month: groceries, eating out, clothes, entertainment, gas.
  • Savings is money you set aside for goals (a trip, a laptop, college or university) or for emergencies.

A budget is balanced when every dollar of income has a job:

income=expenses+savings\text{income} = \text{expenses} + \text{savings}

If expenses plus savings are more than income, something has to change.

Showing a budget three ways

Section titled “Showing a budget three ways”

The same budget can be shown in different ways. Each one is good at something different.

  • A table shows exact amounts and makes it easy to add up totals.
  • A bar graph makes it easy to compare categories, or to compare a budget before and after a change.
  • A circle graph shows each category as a percent of income, so you can see what share of your money goes where.

To find each category’s percent and its angle in a circle graph:

percent=amountincome×100%angle=percent×360∘\text{percent} = \frac{\text{amount}}{\text{income}} \times 100\% \qquad \text{angle} = \text{percent} \times 360^\circ

Here is Jordan’s monthly budget. Jordan has just finished school, works full time, and takes home $3000 per month.

CategoryTypeAmount ($)Percent of income
Rentfixed1200120040%40\%
Foodvariable45045015%15\%
Transportationfixed30030010%10\%
Phone and internetfixed1501505%5\%
Entertainmentvariable30030010%10\%
Clothingvariable1501505%5\%
Savings—45045015%15\%
Total30003000100%100\%
Circle graph of Jordan's $3000 monthly budget: rent $1200 (40%), food $450 (15%), transportation $300 (10%), phone and internet $150 (5%), entertainment $300 (10%), clothing $150 (5%), savings $450 (15%). 40% Rent: $1 200 15% Food: $450 10% Transportation: $300 5% Phone and internet: $150 10% Entertainment: $300 5% Clothing: $150 15% Savings: $450 Jordan's monthly budget ($3 000 take-home pay)
Jordan’s budget as a circle graph. Rent takes 40%40\% of income, so its slice is 0.40×360∘=144∘0.40 \times 360^\circ = 144^\circ.

Changing a budget

Section titled “Changing a budget”

When something changes (a new job, a price increase, a new goal), the budget has to change too. A good change:

  1. Identifies what changed and by how much.
  2. Decides which categories to adjust. Fixed expenses are hard to change quickly, so variable expenses and savings are usually adjusted first.
  3. Keeps the budget balanced: check that the new total still equals income.
  4. Gives a reason for each change (the rationale).

The 50/30/20 guideline

Section titled “The 50/30/20 guideline”

One popular way to plan a budget is the 50/30/20 guideline:

  • about 50%50\% of take-home pay for needs (housing, food, transportation, phone),
  • about 30%30\% for wants (entertainment, eating out, extras),
  • about 20%20\% for savings (or paying off debt).

It’s a starting point, not a rule. In cities where rent is high, needs can take far more than 50%50\%. And a teenager living at home might save much more than 20%20\%.

Worked examples

Section titled “Worked examples”

Example 1: Building a budget

Section titled “Example 1: Building a budget”

Sam is 1616 and takes home $480 per month from a part-time job. Each month Sam pays $40 for a phone plan and $12 for music streaming, and spends about $48 on bus fares, $100 on food with friends, $80 on clothes, and $60 on fun. Sam saves the rest.

Make a budget table, label each expense fixed or variable, and find the percent of income Sam saves.

Solution. Add the expenses:

40+12+48+100+80+60=34040 + 12 + 48 + 100 + 80 + 60 = 340

Savings =480−340=140= 480 - 340 = 140.

CategoryTypeAmount ($)
Phone planfixed4040
Music streamingfixed1212
Bus faresvariable4848
Food with friendsvariable100100
Clothesvariable8080
Funvariable6060
Savings—140140
Total480480

Check: the total is $480, which equals Sam’s income, so the budget is balanced.

140480×100%≈29.2%\frac{140}{480} \times 100\% \approx 29.2\%

Sam saves about 29%29\% of income. (Bus fares count as variable here because Sam pays per ride. A monthly pass would be fixed.)

Example 2: Reading a circle graph

Section titled “Example 2: Reading a circle graph”

Use Jordan’s circle graph.

  • (a) How much does Jordan spend on food each month?
  • (b) What is the angle of the savings slice?
  • (c) If Jordan’s take-home pay rises to $3200 and the percents stay the same, how much goes to food?

Solution.

(a) Food is 15%15\% of $3000: 0.15×3000=4500.15 \times 3000 = 450, so $450.

(b) Savings is 15%15\%: 0.15×360∘=54∘0.15 \times 360^\circ = 54^\circ.

(c) 0.15×3200=4800.15 \times 3200 = 480, so $480.

Example 3: A new shift and a saving goal

Section titled “Example 3: A new shift and a saving goal”

Sam wants to save $780 for a school trip in 33 months. Sam also picks up an extra shift, so take-home pay rises to $540 per month. Change Sam’s budget from Example 1 so Sam reaches the goal, and explain the changes.

Solution. Sam needs to save 780÷3=260780 \div 3 = 260 dollars per month. That’s 260−140=120260 - 140 = 120 dollars more than now.

The extra shift gives 540−480=60540 - 480 = 60 dollars more income. Sam still needs to find 120−60=60120 - 60 = 60 dollars by spending less. The phone plan and streaming are fixed, and the bus fares get Sam to work, so cut variable spending:

  • Food with friends: $100 to $70 (pack snacks, eat at home more often).
  • Clothes: $80 to $50 (the trip is the priority for these 33 months).
CategoryBefore ($)After ($)
Phone plan40404040
Music streaming12121212
Bus fares48484848
Food with friends1001007070
Clothes80805050
Fun60606060
Savings140140260260
Total480480540540

Check: 40+12+48+70+50+60+260=54040 + 12 + 48 + 70 + 50 + 60 + 260 = 540, which matches the new income. Over 33 months Sam saves 3×260=7803 \times 260 = 780 dollars. ✓

Double bar graph of Sam's monthly budget before and after. Phone $40, streaming $12, bus $48 and fun $60 stay the same. Food drops from $100 to $70, clothes from $80 to $50, and savings rise from $140 to $260. $0 $40 $80 $120 $160 $200 $240 $280 Phone Streaming Bus Food Clothes Fun Savings before ($480 income) after ($540 income)
A double bar graph makes it easy to see which categories changed.

Example 4: Prices go up

Section titled “Example 4: Prices go up”

Jordan’s rent goes up 5%5\%, and grocery prices rise so that food costs 4%4\% more. Jordan wants to keep saving $450 per month. Adjust the budget, then compare it with the 50/30/20 guideline.

Solution. Find the new amounts:

rent: 1200×1.05=1260up 60food: 450×1.04=468up 18\begin{aligned} \text{rent: } & 1200 \times 1.05 = 1260 && \text{up } 60 \\ \text{food: } & 450 \times 1.04 = 468 && \text{up } 18 \end{aligned}

Expenses rise by 60+18=7860 + 18 = 78 dollars, but income hasn’t changed. Rent and food are needs, and Jordan wants to keep savings the same, so cut wants:

  • Entertainment: $300 to $240 (down $60: fewer concerts, share streaming services).
  • Clothing: $150 to $132 (down $18).

Check: 1260+468+300+150+240+132+450=30001260 + 468 + 300 + 150 + 240 + 132 + 450 = 3000. ✓ Still balanced.

Now compare with 50/30/20. Jordan counts rent, food, transportation, and phone as needs, and entertainment and clothing as wants.

needs: 1260+468+300+150=217821783000=72.6%wants: 240+132=3723723000=12.4%savings: 4504503000=15%\begin{aligned} \text{needs: } & 1260 + 468 + 300 + 150 = 2178 && \tfrac{2178}{3000} = 72.6\% \\ \text{wants: } & 240 + 132 = 372 && \tfrac{372}{3000} = 12.4\% \\ \text{savings: } & 450 && \tfrac{450}{3000} = 15\% \end{aligned}

Needs take about 73%73\%, far more than 50%50\%, mostly because of rent. That’s common when housing is expensive. Jordan is still saving 15%15\%, which is a solid result. To get closer to the guideline, Jordan could look for a roommate or a cheaper apartment, or try to increase income.

Common mistakes

Section titled “Common mistakes”

Using pay before deductions. Budget with take-home pay, the amount that actually reaches your account. Pay before deductions is bigger than what you can spend.

Forgetting small, regular expenses. Subscriptions, snacks, and app purchases add up. Track your spending for a month before you build a budget so nothing is missing.

Not checking that the budget balances. After any change, add up every category. The total must equal income. If it’s more, you’re planning to spend money you don’t have.

Changing a budget without a reason. “Cut clothes to $50” isn’t a complete answer. Explain why: “Clothes are a want, and the trip is more important for the next three months.”

Mixing up a percent and an amount on a circle graph. A slice labelled 15%15\% means 15%15\% of income. Multiply by the income to get dollars: 0.15×3000=4500.15 \times 3000 = 450.

Treating 50/30/20 as a strict rule. It’s a guideline. A budget that doesn’t match it exactly can still be a good budget, as long as it’s balanced and fits your goals.

Practice

Section titled “Practice”

1. (Warm-up) Is each expense usually fixed or variable?

  • (a) rent
  • (b) groceries
  • (c) a monthly phone plan
  • (d) movie tickets
  • (e) car insurance
  • (f) gas for a car
Solution

(a) fixed (b) variable (c) fixed (d) variable (e) fixed (f) variable

2. (Warm-up) Priya’s take-home pay is $1500 per month and her expenses total $1380. How much can she save to balance her budget? What percent of her income is that?

Solution

Savings: 1500−1380=1201500 - 1380 = 120, so $120.

1201500×100%=8%\frac{120}{1500} \times 100\% = 8\%

3. (Warm-up) On a circle graph of a $2400 monthly budget, find:

  • (a) the angle for a category that is 25%25\% of income,
  • (b) the percent and the angle for a category of $360.
Solution

(a) 0.25×360∘=90∘0.25 \times 360^\circ = 90^\circ

(b) 3602400×100%=15%\dfrac{360}{2400} \times 100\% = 15\%, and 0.15×360∘=54∘0.15 \times 360^\circ = 54^\circ.

4. (Core) Marco takes home $2000 per month. His rent is $800, groceries $300, his transit pass $156, phone $44, entertainment $200, and he saves the rest. Make a budget table with the percent of income for each category.

Solution

Expenses: 800+300+156+44+200=1500800 + 300 + 156 + 44 + 200 = 1500. Savings: 2000−1500=5002000 - 1500 = 500.

CategoryAmount ($)Percent of income
Rent8008008002000=40%\tfrac{800}{2000} = 40\%
Groceries30030015%15\%
Transit pass1561567.8%7.8\%
Phone44442.2%2.2\%
Entertainment20020010%10\%
Savings50050025%25\%
Total20002000100%100\%

5. (Core) Use Jordan’s original circle graph ($3000 take-home pay).

  • (a) How much more does Jordan spend on rent than on transportation?
  • (b) Which two categories together make up 25%25\% of income? Give two different answers.
Solution

(a) Rent is 40%40\% and transportation is 10%10\%, a difference of 30%30\%: 0.30×3000=9000.30 \times 3000 = 900, so $900 more. (Check: 1200−300=9001200 - 300 = 900.)

(b) Any pair whose percents add to 25%25\%, for example food and transportation (15%+10%15\% + 10\%), or savings and entertainment (15%+10%15\% + 10\%). Food and entertainment, or savings and transportation, also work.

6. (Core) Sam’s employer cuts hours, and Sam’s take-home pay drops from $480 to $400. Starting from Sam’s budget in Example 1, make a new balanced budget and explain your changes.

Solution

Sam has 480−400=80480 - 400 = 80 dollars less. Sample answer:

  • Food with friends: $100 to $80 (down $20), eat at home more.
  • Clothes: $80 to $50 (down $30), buy only what’s needed.
  • Fun: $60 to $50 (down $10), choose free activities.
  • Savings: $140 to $120 (down $20), still saving, just a bit less.

The phone, streaming, and bus fares stay the same (fixed costs, and the bus gets Sam to work).

Check: 40+12+48+80+50+50+120=40040 + 12 + 48 + 80 + 50 + 50 + 120 = 400. ✓ Other answers are fine if they total $400 and each change has a reason.

7. (Core) Use the 50/30/20 guideline to plan a budget for take-home pay of $2600 per month. How much goes to needs, wants, and savings?

Solutionneeds: 0.50×2600=1300wants: 0.30×2600=780savings: 0.20×2600=520\begin{aligned} \text{needs: } & 0.50 \times 2600 = 1300 \\ \text{wants: } & 0.30 \times 2600 = 780 \\ \text{savings: } & 0.20 \times 2600 = 520 \end{aligned}

Check: 1300+780+520=26001300 + 780 + 520 = 2600. ✓

8. (Challenge) Marco’s budget from Question 4 changes: groceries go up 8%8\% and his phone plan goes up $6. He doesn’t want to cut entertainment.

  • (a) By how much do his expenses rise?
  • (b) If the extra money comes out of savings, what percent of income does he save now?
Solution

(a) Groceries: 300×1.08=324300 \times 1.08 = 324, up $24. Phone: up $6. Total rise: 24+6=3024 + 6 = 30 dollars.

(b) Savings: 500−30=470500 - 30 = 470.

4702000×100%=23.5%\frac{470}{2000} \times 100\% = 23.5\%

He now saves 23.5%23.5\% of his income, down from 25%25\%.

9. (Challenge) Sam (from Example 1, take-home pay $480) wants a used laptop that costs $1500 plus 13%13\% HST, and already has $300 saved. Sam wants to buy it in 66 months.

  • (a) How much does Sam need to save per month?
  • (b) How much more is that than Sam saves now? Suggest changes to the budget, with reasons, and check that it balances.
Solution

(a) Price with tax: 1500×1.13=16951500 \times 1.13 = 1695. Still needed: 1695−300=13951695 - 300 = 1395. Per month: 1395÷6=232.501395 \div 6 = 232.50, so $232.50.

(b) 232.50−140=92.50232.50 - 140 = 92.50, so Sam needs $92.50 more each month. Sample answer:

  • Food with friends: $100 to $60 (down $40).
  • Clothes: $80 to $40 (down $40).
  • Music streaming: cancel for now, $12 to $0 (down $12; free radio and playlists instead).
  • Fun: $60 to $50 (down $10).

That’s 40+40+12+10=10240 + 40 + 12 + 10 = 102 dollars of cuts, so savings can rise to 140+102=242140 + 102 = 242 dollars per month. That’s a little more than the $232.50 needed, which gives Sam a cushion in case a month costs more than planned.

Check: 40+0+48+60+40+50+242=48040 + 0 + 48 + 60 + 40 + 50 + 242 = 480. ✓ (Other plans work too, such as asking for an extra shift, as long as the budget balances.)