How much disposable income should I have?

Disposable income is what's left from your take-home pay once essential living costs are covered. It's a useful health check — but it isn't the same as money you can spend.

How to calculate it

Take-home pay, minus housing, utilities, food, travel, insurance and minimum debt repayments. On £2,000 a month with £1,600 of essentials, disposable income is £400, or 20% of income.

What a healthy level looks like

There's no universal figure, but the shape people generally aim for is essentials well under three quarters of take-home pay, something going into savings every month, and enough left that an ordinary treat doesn't require a decision. If your essentials are above 80%, the pressure usually shows up as a reliance on credit in expensive months.

Why disposable income overstates what you can spend

It ignores savings and everything irregular. Take that £400 and remove £150 of savings and £120 a month of annual bills spread out, and the truly spendable figure is £130. That gap is where most "I don't know where it goes" feelings come from. The disposable income calculator gives you the first figure; the future spending planner gives you the second.

If yours is thin

• Start with the biggest three costs — housing, energy, car. Small savings there beat cutting coffee.
• Review annual renewals rather than accepting them; insurance in particular.
• List every subscription and cancel anything unused for two months.
• Check you're claiming everything you're entitled to.

Questions people ask