What is the formula to calculate the budget?

The formula to calculate any budget is:

Surplus or Deficit = Total Income - Total Expenses

This basic calculation determines whether a budget is balanced, shows a surplus, or results in a deficit.

Here is an example of the budget surplus/deficit formula. Let's consider Priya's monthly budget:

Total Monthly Income:

• Salary: ₹50,000
• Rental Income: ₹10,000
• Total Income: ₹60,000

Monthly Expenses:

• House Rent: ₹15,000
• Groceries: ₹8,000
• Utilities: ₹3,000
• Transportation: ₹5,000
• Total Expenses: ₹31,000

Now apply the formula:

• Total Monthly Income = ₹60,000
• Total Monthly Expenses = ₹31,000
• ₹60,000 - ₹31,000 = ₹29,000

Priya has a monthly budget surplus of ₹29,000. This indicates she is spending within her income limits.

If her expenses exceeded her income, she would have a deficit. This example demonstrates how the simple budget calculation formula helps analyse one's financial situation. It is an effective tool for personal money management and evaluating government fiscal policy.