It's the 22nd and the banking app shows €1,570. That feels like plenty for a weekend away. But next month's rent is in that number, and so is the car loan, and so are the groceries until payday.
In short: your balance is not your spending money. Before you spend, take away everything that has to leave the account before your next payday, plus the small floor you never go below. What's left is your spendable: the only number that answers "can I afford this?" Check it once a week.
- Balance today
- minus bills due before payday
- minus essentials until payday
- minus your floor
- = spendable
A worked example
Made-up but realistic, the same person as in the monthly budget: €2,400 take-home pay on the 10th, savings of €480 moved to a savings account on payday, €470 a month for wants. They keep a €200 floor in the current account. On Monday the 22nd the balance is €1,570.
| Amount | |
|---|---|
| Balance on the 22nd | €1,570 |
| Rent, due on the 1st | −€700 |
| Car loan and insurance, due on the 5th | −€200 |
| Groceries and transport until the 10th | −€230 |
| The floor they keep | −€200 |
| Spendable until payday | €240 |
€240
€240 for the next 18 days is about €95 a week. That's the number to live with this week. It also matches the budget: €470 for wants this month, of which €230 has already gone.
The weekend away isn't impossible, it's just not in this month's €240. Moved to next month's wants, or saved up over two, it fits.
How to work out yours
1. Start from the balance today
Only the money in your current account. Savings don't count, and neither does an overdraft or a credit card limit.
2. Take away the bills due before your next payday
Rent, loan payments, insurance, subscriptions, anything with a date. Look ahead to the day before payday, not to the end of the calendar month.
3. Take away the essentials until payday
Groceries, transport and other things you'll certainly buy before the money comes in. Your expense tracking gives a daily figure: divide the monthly amount by 30.
4. Take away your floor
A small amount you treat as zero, so a slightly bigger bill doesn't take you into overdraft. Many people use a week of essentials.
5. Divide by the weeks left
What's left is your spendable until payday. Divided by the weeks left, it's your weekly number. Do the sum every Monday: it takes two minutes.
Common traps
- The payday high. On the 10th the balance is at its biggest, and so is the temptation. That's exactly the day most of it is already spoken for.
- Counting the overdraft. An overdraft limit is borrowed money with a rate, not spending money.
- Forgetting yearly bills. If the car insurance is due once a year, put a twelfth aside every month, or one month's spendable will be wiped out by it.
When this isn't enough
If spendable is below zero before you've spent anything on wants, the month doesn't add up. That's a budget problem, not a spending one (cash flow 101 shows how to tell). If it's low only in the days before payday, look at moving due dates or getting a month ahead.
Check the month first
The free 50/30/20 budget calculator shows your wants limit for the whole month. The weekly spendable is that limit, counted down.
One thing to do today
Open your banking app, write down the balance, and take away every bill due before your next payday. Look at the number that's left before you spend anything else this week.
In Volora, budgets show how much of each limit is left this month, and you can get an alert when one gets close. On paper, the five lines above do the same job.