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Disposable income

What you can actually spend or save each month: net income minus fixed commitments.

In economics, disposable income is what remains after taxes and social contributions. For personal finance it pays to go one step further: what remains after fixed expenses (rent or mortgage, utilities, subscriptions, instalments). That is the money you truly decide about each month.

Knowing your real disposable income avoids the salary mirage: two people with the same income can have very different room to manoeuvre depending on their fixed costs. It is the figure any budgeting rule or savings goal should be applied to.

To calculate it, add up a normal month's fixed expenses and subtract them from your net income. If you track your movements, your categories already paint the picture without extra maths.