For many people, determining how much money to leave over each month can be confusing. The answer is not universal, it depends on your income, fixed expenses, and financial goals. However, using a structured approach ensures that your leftover funds are intentional, rather than accidental. In personal finance, this leftover is often referred to as “Safe-to-Spend” money, the amount available after covering essentials, savings, and a buffer.
Here's how to determine the amount you should have left over each month:
Assess Your Income and Fixed
Before calculating leftover money, it is important to understand your monthly cash flow. Start by tracking your total take-home pay and subtracting all fixed costs, such as rent, utilities, transportation, and minimum debt payments. This step provides clarity on what is truly available to allocate toward discretionary spending or additional financial goals. Many financial experts recommend using tracking apps or spreadsheets to ensure accuracy.
Prioritize Financial Goals
Leftover money should not be treated as simply “fun money.”A high-agency financial planning involves allocating funds to growth, protection, and discretionary categories. Common priorities include building an emergency fund (three to six months of living expenses), paying down high-interest debt, investing in retirement or stocks, and funding lifestyle goals like travel or learning. One widely used framework divides income into percentages: roughly 50% for essentials, 30% for savings and investments, and 20% for safe-to-spend funds.
Calculate Safe-to-Spend Money
The Safe-to-Spend formula provides a practical way to determine leftover funds:
Safe-to-Spend = Income − (Fixed Expenses + Automated Savings + Buffer)
For example, if a person earns ₦400,000 per month, spends ₦200,000 on essentials, allocates ₦120,000 to savings and investments, and sets aside ₦20,000 as a buffer, the Safe-to-Spend amount is ₦60,000. Placing this amount in a separate account or debit card can prevent overspending and provide peace of mind.
Adjust for Income and Goals
Leftover money should scale with both income and financial objectives. Individuals with lower income may need to prioritize debt repayment and emergency savings over discretionary spending, while higher earners can increase investment contributions or allocate more toward experiences and learning. A practical benchmark is to aim for 10%–20% of monthly income as Safe-to-Spend, adjusting for personal circumstances.
Review and Reallocate Monthly
Safe-to-Spend money is not static. It For many people, determining how much money to leave over each month can be confusing. However, using a structured approach ensures that your leftover funds are intentional, rather than accidental.
In conclusion, while there is no single “correct” amount of leftover money each month. The goal is to ensure that essentials are covered, financial priorities are funded, and some funds remain for discretionary use.
