The concept of getting ahead financially is deceptively simple – earn more and spend less. If we can do this we can pay down debt, build up a financial buffer of savings or save and invest for longer term goals. But it is easier said than done. Where do you start?
Few of us have direct control over what we earn and improving our income takes time. But all of us can start making different decisions today about how much we spend and what we spend on.
To help you do this we have calculated an estimate of what it cost you to live an average day in May 2017 and where we could we have compared it to your average daily cost of living in April 2017, March 2017 and for the whole of 2016.
For many of us, this number will be a real eye opener and will be greeted by responses like “Really? It costs me that much to live?” or “What did I spend all that money on?”
After the initial shock you might want to consider things like:
- Is my cost of living rising, falling or staying the same and how does that relate to my income?
- How much of my cost of living is “essential” and how much is “lifestyle”?
- How does my spending align with what is important to me?
- What changes could I make to feel better about my money?
Unfortunately, for most of us, as our income rises so do our expenses – locking in a kind of ‘personal rate of inflation’ which can keep us from reaching important financial goals and financial freedom.
How MoneyBrilliant can help
MoneyBrilliant can help you answer these questions.
Use our spending reports to track your spending over time and look for trends, see how much you spend on essentials and lifestyle. In the app you can change the categories that go into each if you don’t like our definitions of essentials and lifestyle spending. Use our categorisation of your spending to see how it aligns with the things that are important in your life.
To login to the MoneyBrilliant app and go straight to spending reports for May 2017 click here.
You can also use the Net Worth feature (and the Net Worth tracking feature available to Plus Plan members) to track the changes in your Net Worth over time. For further details of the features available to Plus Plan members and reasons to upgrade have a look at details of our Plans.
We will also send you a summary of your daily cost of living each month in your Activity Feed to help you track changes.
How does my average daily cost of living compare with others?
The simplest answer is that it doesn’t matter! Your average daily cost of living is all about you. It is only an estimate and we believe that how it changes over time is what’s important. However, we know that people will be interested in how their cost of living compares to other peoples. The following chart shows you a distribution of average daily cost of living to help you see where you sit – below average, average or above average!
What we hope you do
We think that having one simple number is a cool way to think about our spending habits. We hope you have some fun with it and find it helpful in setting goals and tracking your progress in 2017.
How did we calculate your average daily cost of living?
Calculating an estimate of your daily cost of living in a meaningful way for everyone is difficult. We had to make a number of decisions to try and provide the most meaningful estimate for the most people. Here is what we did:
- We only included bank accounts, credit card accounts and loan accounts in our calculation. This means we excluded investment accounts. We found that lots of people had large value transactions on their investment accounts which distorted the daily cost of living calculation
- We excluded transactions categorised as transfers. We figured that these probably weren’t really expenses
- We excluded a number of MoneyBrilliant customers that had unusually high or unusually low average daily spend. We know that some of our customers use MoneyBrilliant for things like tracking income and expenditure for businesses and we didn’t want these numbers impacting the calculations for other users
What can I do to make my average daily cost of living calculation more accurate?
If you’ve looked the number and just don’t believe it is correct, possibly you just don’t realise what it costs to live an average day of your life!
Seriously though, there are a number of things that might affect the accuracy of your calculation including:
- You haven’t linked all your accounts to MoneyBrilliant – if we can’t see the transactions we can’t include them in the calculation. This is likely to result in a number that is lower than it should be
- Transactions are incorrectly categorised – if you have transactions incorrectly categorised as Transfers or some type of income we will have excluded them
- You have joint accounts and some of the expenditure belongs to someone else or you have other people’s accounts linked to your MoneyBrilliant account – we will have used this expenditure in your calculation – and theirs if they use MoneyBrilliant
- You have business accounts connected – we will have used these transactions in your calculations
- You make payments to your superannuation fund or transfer money to other investments and these aren’t categorised as Transfers – the payments will be included in your daily spend
If you spot something that is incorrect please let us know at firstname.lastname@example.org