"How much can I spend a day until I get paid?" is the most practical budgeting question there is. The answer is a simple division, but most people get it wrong in the same way: they divide what they have by the days left, and forget the bills that will go out before payday.
The calculation
- Take what your accounts hold today (only the money you would spend, not savings).
- Add any income that arrives before payday.
- Subtract every bill that will go out before payday: rent, direct debits, subscriptions, the phone, the gym, the card bill.
- Divide by the number of days until payday.
The result is what you can spend each day on everything that is not a planned bill: food, transport, going out, small things.
An example
Today is the 10th and your salary arrives on the 28th: 18 days. Your account holds 1,400. Before the 28th, these bills go out: phone 50 on the 12th, electricity 70 on the 15th, car insurance 450 on the 20th, streaming 15.
| Amount | |
|---|---|
| In the account today | 1,400 |
| Bills before payday | −585 |
| Left to live on | 815 |
| Per day, for 18 days | 45.28 |
Dividing 1,400 by 18 would have said 77.78 a day: over 70 % more than you really have. The car insurance alone would have turned a comfortable month into an overdraft on the 20th.
The usual mistakes
- Forgetting bills that do not come every month: insurance, water, a yearly subscription. They are exactly the ones that break the calculation.
- Counting the savings account. If you would not spend it, leave it out.
- Counting bills due after payday. The next salary pays those; subtracting them now makes the daily amount too low.
- Doing it once. The amount changes every time you spend more or less than planned. Redo it every few days, or let an app do it.
Per day or per week?
A daily figure is easy to check against a single purchase ("can I spend 30 on dinner?"). A weekly one suits people who shop once a week. Both come from the same calculation: multiply the daily amount by 7.
When the result is negative
If the bills before payday add up to more than you have, the calculation tells you how much is missing, and when. That is useful too: you know it now, not when a direct debit bounces. Move money from savings, ask a provider to move a due date, or delay a purchase.
Let Xpenses work it out
Xpenses shows this figure under your month end, every day, from the bills you planned and the payments you ticked: "45.28 a day until 28 November (Salary)". It finds payday from your salary's due day, leaves bills after payday to the next salary, and tells you how much is missing when money is short. It is free. How the daily amount works, and for the whole month, the month-end forecast.