Maybe it’s just me, but “Disposable Income” has always sounded like I can just fritter it away with complete abandon. The dictionary definition is of course pretty much that but also it means available which is my personal preference.  It conjures up a can use if you want to connocation rather than it’s to be out of your hands quicker than a hot potato.

Technically it means Income – taxes – national insurance = disposable income.

But it also means what’s leftover after the essentials are paid for.

How can you quantify what your available spending is each month, each quarter, each year?

 

Feeling guilty about spending money is really common. I feel guilty treating myself. I often call buying a new face moisturiser a treat! I guess that all comes down to our perception of value.

I often buy a navy blue tub of Nivea in the supermarket and I never feel emotional about that,  but if we’re talking about my favourites Liz Earle and Dermalogica I can hear myself saying “I can’t justify buying it” but what does this mean? Does it mean I don’t have the money or that it’s destined for something else?

Most likely it’s me, defining it’s worth when there’s other things to buy and cheaper options.  But what about MY worth?

Ahhhhhh… yes the old “but I’ve worked hard I deserve it” justification. Show me a woman that has neither worked hard nor didn’t deserve it! As L’Oreal states, for this very reason, “We’re worth it”. What do you tell yourself when you want to buy yourself something? Do you spend it on the house so it’s a joint treat? Do you spend it all on the kids so it barely even counts?

Disposable Income is a financial term that financial institutions will use to determine your affordability for other products most likely credit products. They want to know if you’ve got enough leftover from your essential stuff to add this into your budget. Do you struggle to know this number? Does your heart sink when they tell you to go away and “Just do a budget”?

How empowering would it feel to know your numbers?

How wonderful would it be to be able to say a decisive YES to something new that you of course absolutely deserve but usually aren’t sure you can justify?

I’m a million miles away from passing any algebra tests but I can show you this simple sequence that will help you make your decisions more clear.

• Income – priority spending – savings = your available guilt free spending.
• So breaking this down, let’s say your household income is £4000 a month
• Your priority spending is £2800
• Your savings are £200
• Your Disposable Income is therefore £1000.

Now, this is simplified because we’ve not factored in the planning element. Some months are more expensive than others which is why having a year’s worth of best guestimate planning in front of you is a game changer.  And that is why I have designed them for you!

Whatever your average disposable / available income is, how do you then manage this? If you are coupled up do you go 50/50? Do you decide that half (£500) goes on the garden this month and you each get a quarter (£250)?

More on relationships and money in another blog. But, do you see how you can simplify knowing your numbers and how much easier it makes it to then decide how you spend it, justification free?

Pop your questions, ideas & comments below – let’s talk about money!