How much of the month is already spoken for, and what committed versus discretionary spending means

The money that is already spoken for is every bill with a known amount that will come due this month, whether or not it has been paid yet. Add those up, subtract them from take-home pay, and what remains is the discretionary money, the only part of the month that involves a decision. For most households the committed share is half to two thirds of income, which is why a month can feel tight on the 3rd with the checking balance still high. Most of that balance already has a name on it.

Committed money looks available until it isn't

On payday, checking shows $4,200, and it feels like $4,200. Over the next thirty days, $2,700 of it will leave for rent, the car, insurance, the phone, the loan, and the subscriptions, on dates that are already fixed. The balance was never $4,200 of spendable money; it was $1,500, dressed up.

Most mid-month overspending is this mistake and nothing else: spending against the balance instead of against the discretionary figure. The balance is true and useless. The discretionary figure is the number the month actually runs on.

What counts as committed

A committed expense has a known amount and a known date. Rent or the mortgage, utilities, insurance, loan payments and card minimums, childcare, the phone and internet, subscriptions, tuition installments, and the monthly share of bills that come less often than monthly all qualify. So does a savings transfer that moves automatically on payday, because a commitment you made to yourself is still a commitment.

Groceries and gas are necessary but not committed. Their amount and timing are decided week by week, which makes them the first discretionary lines rather than bills. They get a budget, and they get paced. See How to pace spending through a month for that side.

Compute the committed share, step by step

1. List every monthly bill with its amount. For bills that vary, such as electricity, use the high end of the last three months.
2. Add the monthly share of every bill that comes less often than monthly: the insurance premium due twice a year, the annual renewals, the quarterly water bill, each divided by the months between payments. Count the share in every month, including the month the bill lands, and pay the bill itself from the reserve the shares built, so it is never counted twice.
3. Add a savings transfer if one moves automatically.
4. Total the list. That is the committed amount.
5. Subtract it from take-home pay. The result is the discretionary money.
6. Divide the committed amount by take-home pay. That is the committed share, and it is the number that describes how much room the month has.

A worked example

Take-home pay of $5,200 a month.

Of the $1,197, groceries take about $650 and gas about $160, leaving $387 for everything that is genuinely optional: dining out, shopping, entertainment, and the small purchases that feel free on the 3rd. In a month where the checking balance opened at $5,200, the money that involved a choice was under $400.

The same split explains the 12th. With $3,100 still in checking, $1,430 of it is bills still due before the month ends, plus whichever subscriptions haven't charged yet, so about $1,670 is really there, and the plan's remaining discretionary money is a smaller figure still. The balance looks like a cushion. The list says it is rent's neighbors, waiting their turn.

Read the number

Above about two thirds committed, the month has no slack. One surprise, a car repair or a medical bill, lands on a card, because the discretionary money can't absorb it. The fix lives on the committed side, in a bill, a rate, or a subscription, and it is slow, because commitments change one at a time. The savings transfer is the one committed line that can give way for a month, which is why it belongs at the end of that list rather than the start.

Between half and two thirds, which is typical, the discretionary money is enough to absorb a normal month and not an unusual one, and it needs a pace so that the 20th doesn't arrive empty.

Below half, the flexible categories decide the month, and the usual budgeting advice about dining out and shopping actually applies. Above it, that advice is aimed at the wrong third of the money.

The committed share is the number that mid-month discipline can't touch. It changes only when a commitment changes, which is why knowing it tells you where the work is.

Common mistakes

• Reading the balance as available, which is the whole problem restated.
• Forgetting the bills due after the next payday, because the balance will be topped up by then. It will, and the bills will take it.
• Treating a paid bill as gone. Rent leaves on the 1st and is committed again on the 2nd, for next month. Each month's committed total is about the same, which is what makes it a useful number.
• Leaving out the non-monthly bills, so that the committed share is right for ten months and wrong for the two that matter.
• Counting groceries as committed and then never pacing them, or counting them as optional and then never funding them.
• Spending a canceled subscription twice. Money freed from a commitment needs a new name, or it becomes discretionary by default.

Common questions

Are groceries committed or discretionary? Discretionary, in the sense that the amount and timing are decided weekly, and necessary, in the sense that they can't be skipped. Give groceries a budget and a pace, and count them first among the discretionary lines.

Is a savings transfer committed? If it moves automatically on payday, yes, and treating it that way is what makes it happen. A savings amount that is decided at the end of the month from whatever is left is discretionary, and it is the first thing the month runs out of.

How do I handle a bill that varies, like electricity? Commit the high end of the last three months. Most months the actual bill is lower, and the difference is a small surplus at month end rather than a shortfall in the month the bill spikes.

What committed share is too high? Above about two thirds, a month has no room for anything unplanned, and the discretionary money is mostly groceries and gas. That isn't a budgeting failure; it is a fixed-cost problem, and it is solved on the committed side.

Does a credit card payment count as committed? The purchases on the card were the spending. The payment settles them and is a movement between your accounts, not a second expense. If you carry a balance, the minimum payment is committed, and the rest is a decision. See How to stop credit card payments and transfers from double-counting.

How Zypper handles this

Zypper works out the committed share for you and can show the month without it. Detected bills in your spending categories count as money already spoken for from the start of the month they are due, at their usual amount before the charge arrives, and a category's bar extends an outline past your spending for the bills still due, so the committed part of each category is visible. Turn on Hide recurring in the budget page's display settings and the summary shows only discretionary, non-recurring spending: recurring payments come out of the spent figure, and the amount committed to bills this month, paid, still expected, or late, comes out of the budget, which leaves the discretionary picture: what you planned to spend, minus what is already committed. The equation under the chart shows how the total was reached either way, and the pace guide is always measured against the part of the budget not committed to bills. For bills that come less often than monthly, a category that rolls over holds back a reserve from its carried balance for the next due date and states the budget after it. See Tracking your spending pace and Recurring bills in your budget for the details, or get started with Zypper to see your own committed share.