How to know how much you can spend

In a nutshell

How much you can spend depends on two dates: today and the day money comes in again. Take today's balance, subtract the bills due before then and keep a safety margin. Divide what is left by the remaining days. That is your daily limit.

The math in three parts

• Today's balance: the money in your accounts right now. Your credit limit does not count.
• What is due before your next income: bills, the card statement, installments, monthly fees and any payment dated before your next payday.
• Safety margin: an amount you set aside and pretend does not exist. It covers small surprises, such as medicine or a quick repair.

The math is: balance − bills before next income − margin = what you can spend. Then that amount divided by the remaining days = how much you can spend per day.

Example

Carlos, who lives in Brazil, gets paid on the 5th of every month. Today is the 20th, and the month has 30 days. He has a balance of R$ 1,500 (R$ is the Brazilian real).

Before the 5th, these are still due:

• Internet: R$ 100
• Card statement: R$ 600

Total due: R$ 100 + R$ 600 = R$ 700.

What is left after bills, his available money: R$ 1,500 − R$ 700 = R$ 800.

Carlos keeps R$ 200 as a safety margin: R$ 800 − R$ 200 = R$ 600.

From the 20th to the 4th, the day before payday, there are 15 days: 11 days to the end of the month (the 20th to the 30th) plus 4 days of the next month. So: R$ 600 ÷ 15 = R$ 40 per day.

Those R$ 40 a day cover groceries, bakery, transport and leisure. If he spends only R$ 20 one day, he has R$ 20 extra for another day. If he spends R$ 70, he needs to make up for it in the following days.

How big a margin

There is no right amount for everyone. One idea is to start with the cost of a common surprise in your home, such as a trip to the pharmacy or a gas cylinder for the stove. If you do not use the margin before your next income, it can become the start of an emergency fund.

Step by step

1. Check today's balance in your accounts, without your credit limit.
2. Mark the date of your next income.
3. List the bills due before that date and add them up.
4. Subtract that total from the balance, then subtract the safety margin.
5. Count the days until your next income and divide the result by them.
6. In Meu Gasto, open Ask and type "how much can I spend?". It uses the bills and cards you have registered. You can also simulate a purchase before making it: nothing is saved.
7. Redo the math once a week or whenever a new bill appears.

Common mistakes

• Forgetting the card statement. The balance still includes the money that will pay the statement. If it is due before your next income, subtract it.
• Forgetting bills that do not come every month. Vehicle tax, school supplies and annual card fees also fall due. Register them ahead of time.
• Leaving no margin. Without a margin, any surprise turns into a loan or an overdraft. Even a small margin helps.
• Dividing by the whole month. If 15 days are left, divide by 15, not 30. Otherwise your daily limit is wrong.