Estimate your financial capacity for various life decisions.
Estimated Affordable Monthly Amount:
$0.00
Understanding Your Financial Affordability
Financial affordability is a crucial concept for making informed decisions about significant life events, investments, and even day-to-day spending. It represents the amount of money you can realistically allocate towards new financial commitments, savings goals, or discretionary activities after accounting for essential expenses and existing financial obligations. This calculator helps you estimate your available funds based on your income, current debt, and spending habits.
How the Affordability is Calculated
This calculator uses a straightforward, yet effective, formula to determine your estimated affordability. The core idea is to start with your total income and subtract all your necessary outgoing expenses.
Gross Monthly Income: This is your total income before taxes and other deductions.
Total Monthly Debt Payments: This includes minimum payments on credit cards, student loans, car loans, personal loans, and any other recurring debt obligations.
Estimated Monthly Discretionary Spending: This is an estimate of what you typically spend on non-essential items and activities like dining out, entertainment, hobbies, subscriptions, and personal care.
Desired Monthly Savings Rate: This is the percentage of your gross monthly income you aim to save.
The calculation proceeds as follows:
Calculate the target savings amount: Target Savings = Gross Monthly Income * (Desired Monthly Savings Rate / 100)
Calculate total essential and committed outflows: Total Outflows = Total Monthly Debt Payments + Estimated Monthly Discretionary Spending + Target Savings
Calculate Estimated Affordable Monthly Amount: Affordable Amount = Gross Monthly Income - Total Outflows
The resulting "Estimated Affordable Monthly Amount" is the surplus income available after covering your debts, estimated discretionary spending, and achieving your savings goals. This figure can help guide decisions regarding new loans, investments, major purchases, or increased spending in certain areas.
When to Use This Calculator
This affordability calculator is versatile and can be used in various scenarios:
Considering a New Loan: Determine how much extra you can comfortably afford to pay towards a mortgage, car loan, or personal loan.
Budgeting: Understand how much you can allocate to different spending categories or saving goals each month.
Planning for Major Purchases: Assess your capacity to save for or finance a significant purchase like a down payment on a house, a new vehicle, or a vacation.
Evaluating Lifestyle Changes: See how potential increases in discretionary spending might impact your financial goals.
Debt Management: Identify potential areas where you could allocate extra funds to pay down debt faster, if desired.
Remember, this calculator provides an estimate. It's always advisable to consult with a financial advisor for personalized guidance, especially when making significant financial commitments.
function calculateAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").value);
var discretionarySpending = parseFloat(document.getElementById("discretionarySpending").value);
var savingsRate = parseFloat(document.getElementById("savingsRate").value);
var affordabilityResultElement = document.getElementById("affordabilityResult");
// Clear previous results and styles if inputs are invalid
affordabilityResultElement.innerText = "$0.00";
affordabilityResultElement.style.color = "#28a745"; // Default to success green
if (isNaN(monthlyIncome) || monthlyIncome < 0) {
alert("Please enter a valid Gross Monthly Income.");
return;
}
if (isNaN(existingDebts) || existingDebts < 0) {
alert("Please enter a valid Total Monthly Debt Payments.");
return;
}
if (isNaN(discretionarySpending) || discretionarySpending < 0) {
alert("Please enter a valid Estimated Monthly Discretionary Spending.");
return;
}
if (isNaN(savingsRate) || savingsRate 100) {
alert("Please enter a valid Desired Monthly Savings Rate between 0 and 100.");
return;
}
// Calculations
var targetSavings = monthlyIncome * (savingsRate / 100);
var totalOutflows = existingDebts + discretionarySpending + targetSavings;
var affordableAmount = monthlyIncome – totalOutflows;
// Ensure the affordable amount is not negative, display 0 if it is.
if (affordableAmount < 0) {
affordableAmount = 0;
}
affordabilityResultElement.innerText = "$" + affordableAmount.toFixed(2);
// Adjust color if the affordable amount is very low, indicating tight finances
if (affordableAmount < monthlyIncome * 0.1) { // If less than 10% of income is affordable
affordabilityResultElement.style.color = "#ffc107"; // Warning yellow
}
if (affordableAmount === 0) {
affordabilityResultElement.style.color = "#dc3545"; // Danger red if zero or negative
}
}