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How much do you spend a day? Think about all those areas where money slips away: The $5 latte at Starbucks. The $11.99 you spend on a sandwich and soup combo at lunch. The $2000 Mac laptop purchase, which, amortized over three years, costs $1.83 a day. Or the yearly $1,500 vacation that costs $4.11 a day. If you make less than $90,000 a year and add up all the expenses you incur in a day, not counting housing, cars, or normal household bills, you probably would have spent an average of $59 a day. That's the statistic from Gallup Research, and if you want to see what that means in color, check out Bundle, an interactive social finance site.
If you have no idea where your money goes, you're not alone. It's difficult to keep track of every penny (I couldn't), but some people do it, both for fun and for motivational purposes. The rise of personal finance blogs and the economic spotlight on spending and saving has bought many financial diaries to light.
For example...
College students at University of Massachusetts recorded their spending in a weekly spending diary. Laura at No More Spending explains how she keeps track of her money - she writes down every expenditure in a Moleskin notebook, then transfers the figures over to Excel every Sunday. Madame X at My Open Wallet posts frequent monthly spending recaps that detail how much she spent on housing, dining, gifts, entertainment, clothing, travel, medical expenses, etc. In April 2010, she spent an average of $42 a day on expenses other than housing and utilities. That's 29% lower than the average American!
Stacking Pennies also shares her monthly recaps on spending, which includes line items to save for big travel plans or her wedding. According to her budget, Stacking Pennies only budgets spending $26 per day - that's probably one reason why she has achieved such a strong financial foundation though she is only in her twenties. Another blogger, Money Maus, tracks her spending especially on vacations where the temptation to hand over the cash is particularly strong.
If you'd like to see how you compare with the average American in terms of daily spending, here's an easy way to figure out how much money you have to use daily:
(1) Take your monthly net income (after taxes and after 401K contributions).
(2) Subtract out whatever after-tax savings you put away (Roth IRA contributions, savings to money market funds, money you send to CDs, etc).
(3) Subtract your rent or mortgage, and your car payment.
(4) The resulting number is your monthly spending.
(5) Divide the number in Step (4) by 30.5 days in a month.
(6) This number is how much you have on average to spend daily.
For example, if your take-home pay is $3,000 a month, and you have $900 rent and $200 car payment, plus you save another $200 in an emergency fund every month, here is what you'd do: $3,000 - $900 - $200 - $200 = $1,700. That's your monthly spending number. Divide $1,700 by 30.5 days in a month, and you arrive at a daily spending number of $55.74.
Once you know how much you can spend per day, it's another data point to help you adjust your spending levels if necessary.
Wellheeled writes at Wellheeled blog and is on Twitter. Savvy Living Through Personal Finance.
