Single Number Approach: What is this type of budget?

Do you know those occasional expenses that appear throughout the week? Understand how the unique number approach helps you organize them.

Single Number Approach: What is this type of budget?


tracktracktracktracktrackAdd here, divide there, cut this, add that… Some people say that financial planning means sitting for hours in front of a spreadsheet, where every penny that goes in and out of the account is rigorously calculated. This definition is not wrong for some people, but no matter how well we organize ourselves, there will always be an unexpected expense throughout the week. It is this type of expense that the one-number-approach (or “one-number-approach”) approach helps to organize.So can you predict the unpredictable? So-so. Extra expenses happen and can be expensive at the end of the month. What a single-number budget proposes is to set a tolerance margin to spend weekly on variable expenses – from pizza delivery to a little home maintenance – without compromising your income.The proposal was created by Rachel Sanborn, director of advisory services for the American financial platform Ellevest . Rachel’s thinking is that fixed expenses (such as bills and debts) need to be respected, so what can vary is flexible spending. And, to be able to pay all this without running into the red, each person needs to reach the so-called unique number .

So, by having a broader sense of how far you can go with your spending each week, it’s easier to keep track of money without squeezing at the end of the month.

Understand, below, how this budget model works, and how to find your unique number.

What do I need to know about the unique number budget?

Before starting the calculation, you need to assess your monthly income and understand your fixed and variable expenses.

Monthly income is the money that comes into your account each month. If you have a CLT job, consider your take-home pay, ie: discounts already deducted. If you are self-employed or informal, consider the average of the last 12 months to get an idea.

Fixed expenses are all accounts that don’t vary much from month to month that you can predict.

In this category you can include everything from expenses considered essential, such as rent, water, electricity and food, to recurring subscriptions such as a gym plan or a streaming service, for example. If you have a mortgage or save a monthly amount for your emergency reserve or debt settlement, include these expenses as fixed expenses as well.

Variable expenses are everyday purchases. Do you know when you leave home to solve something on the street and take the opportunity to stop by the stationery store? Or at home, when you get too lazy to cook and you decide to order a pizza?

So: variable expenses are those that were not planned in advance because they do not always happen, and require your decision to be made.

Here, what matters is not whether or not they are expendable, but what these expenses are. It can be a change in the resistance of the shower, a trip to the market or even a popsicle bought at the bakery.

These are the expenses that the one-number approach will help to control.

And how is the calculation to arrive at this unique number?

The calculation is very simple:

  1. Write down your monthly income;
  2. Subtract all your fixed expenses;
  3. Divide the result by 4.3, which is the average number of weeks in a month;
  4. Ready! The result obtained is your weekly number.

In practice, a person with a net salary of BRL 3000, and who has BRL 2300 in fixed expenses, can calculate their unique number as follows:

Monthly income: BRL 3000

Fixed expenses: R$ 2300

Now, just subtract the fixed expenses from the monthly income. It looks like this: BRL 3000 – BRL 2300 = BRL 700 (money that can be used for variable expenses).

Then, just divide this amount by the average number of weeks per month (4.3, remember?): R$700 ÷ 4.3 = R$162.79.

In other words: for this person in the example, R$ 162.79 is the total amount he can spend weekly with variable expenses. This makes it much easier to make decisions and control the budget.

As this amount works as a spending ceiling, it is possible, for example, to spend a little below the amount in one week and compensate with a higher expense in the other. And, of course, if a person spends less than that every week, he or she can still scrape together some money for the emergency reserve.

Will it work for me?

As with any budget model , the answer is: it depends. There are different approaches with different cuts, and all have their advantages and disadvantages.

It is worth remembering that the average monthly income of Brazilian workers is R$2,532 , and often the salary of a single person is responsible for supporting the entire family. As a result, there is little – or nothing – left for variable or non-essential expenses.

In the case of the one-number approach, this budget mainly helps people who have difficulty managing their day-to-day money. Sometimes it is minor or occasional expenses that weigh on the sum of the family budget. So a model like this can work, because it imposes limits that are not always obvious when we make decisions about whether or not to pay an expense.

Anyway, there is no right answer. It’s worth testing different models until you arrive at what suits you best, since the more understanding you have about your money, the better your decisions about how to use it.

It is important to remember that the single number does not represent a free pass to spend it all: having that amount available every week is a possibility, not an obligation. Whenever you can save, a little bit, choose to save to invest in bigger goals.


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