How Much Can I Spend Per Month?

Your bank account can't tell you. It's a number you work out once, and it's usually a lot lower than the balance sitting in checking.

Here's the formula: take what you earn, subtract what's already committed, subtract what you're setting aside for the bills that aren't monthly. The remainder is what you can spend this month. That last number is the one you want. Everything else is noise.

Your checking balance is lying to you

Not on purpose. It's just answering a different question. Your balance tells you how much money is in the account right now. It says nothing about how much of that money is already spoken for.

Rent hasn't left yet. The car payment is coming. Some of what's in there is going to insurance and the phone bill and the minimum on a card. So when you see $1,900 in checking on the 12th and try to decide whether you can afford dinner out, you're guessing, because you can't see which dollars are yours and which are already gone.

That guess is the problem. It's why you can have money in the account and still feel broke, and why you can feel flush right after payday and be short by the 20th.

The three subtractions

To get to a number you can trust, you take your income and remove three things.

One, your fixed costs.Rent or mortgage, utilities, phone, insurance, the subscriptions you still use, and the minimum payments on any debt. These show up every month whether you think about them or not. Add them up once. They don't change much.

Two, your set-asides for the bills that aren't monthly.This is the one most people skip, and it's the one that wrecks the math. Car registration, the insurance premium that hits twice a year, holiday spending in December, the annual subscription that renews all at once. None of these are monthly, but all of them are real. Add up what they cost you over a year, divide by twelve, and that's what you quietly set aside every month so none of them is ever a surprise.

Three, that's it.There's no other category to hunt for. Income, minus fixed, minus set-asides. What remains is yours to spend this month.

Notice what's not on the list. Groceries aren't here. Gas isn't here. Dinner out isn't here. Those come out of what's left, because those are the things you decide at the moment you spend. That's the point of the number: it's the money you get to make choices with.

What it looks like with real figures

Say you take home $4,200 a month.

Your fixed costs come to $2,600: rent, utilities, phone, insurance, the minimum on one card.

Your once-a-year bills add up to about $3,600 across the year, so you set aside $300 a month for them.

$4,200 minus $2,600 minus $300 is $1,300.

That $1,300 is what you have left unspent this month. Not the $4,200 that landed on payday, and not whatever happens to be in checking today. Thirteen hundred. If you want a daily sense of it, that's about $43 a day across a 30-day month, which is a useful gut-check when you're standing in a store.

Spending against the number

Once you have it, the practice is simple. Put your day-to-day spending on one card. Pay it off every month. Then the only thing you check is that card's balance against your number. Under it, you're fine. Getting close, you ease off. There's nothing to categorize and no receipts to sort. One number to stay under, one balance to glance at.

Try it now

You can run the subtraction on paper. Or put your income, your fixed costs, and your set-asides into the calculator on our home page and it hands you your One Number in about a minute. That's the quick version: one month, one number, no account needed.

Or open the app for the full version. It updates your One Number as things change, handles your set-asides and any goals or debts you're carrying, and gives you one number to check each month. Same math as the calculator, made to run for the long haul.

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