Money

Your average daily cost of living – too high, too low or just right?

Published on January 16, 2017 6:12 am, by

The concept of getting ahead financially is deceptively simple – earn more and spend less. If we can do this we can pay down debt, build up a financial buffer of savings or save and invest for longer term goals.  But it is easier said than done.  Where do you start?

Few of us have direct control over what we earn and improving our income takes time. But all of us can start making different decisions today about how much we spend and what we spend on.

To help you do this we have calculated an estimate of what it cost you to live an average day in 2016 – your Daily Cost of Living.

For many of us, this number will be a real eye opener and will be greeted by responses like “Really? It costs me that much to live?” or “What did I spend all that money on?”

After the initial shock, you might want to consider things like:

  • Is my cost of living rising, falling or staying the same and how does that relate to my income? (Unfortunately for most of us our spending rises as fast as our income rises slowing our progress toward financial well-being and freedom)
  • How much of my cost of living is “essential” and how much is “lifestyle”?
  • How does my spending align with what is important to me?
  • What changes could I make to feel better about my money?

How MoneyBrilliant can help

MoneyBrilliant can help you with all of these questions.

You can use MoneyBrilliant’s spending reports to track your spending over time and look for trends, see how much you spend on essentials and lifestyle (and change the categories if you don’t like our definitions of essentials and lifestyle spending) and use our categorisation of your spending to see how it aligns with the things that are important in your life.

Later this month you will also be able to use our new Net Worth feature (and the new Net Worth tracking feature available to Plus Plan members) to track the result of your income end expenditure over time.  For further details of the features available to Plus Plan members and reasons to upgrade have a look at details of our Plans.

We will also send you a summary of your daily cost of living each month in your Activity Feed to help you track changes.

How does my average daily cost of living compare with others?

The best answer is that it doesn’t matter!  Your average daily cost of living is all about you.  It is only an estimate and we believe that how it changes over time is what’s important.

However, we know that people will be interested in how their cost of living compares to other people’s.  The following chart shows you a distribution of average daily cost of living to help you see where you sit – below average, average or above average!

What you can do with this information

We think that having one simple number is a cool way to think about our spending habits.  We hope you have some fun with it and find it helpful in setting goals and tracking your progress in 2017.

How did we calculate your daily cost of living?

Calculating an estimate of your daily cost of living in a meaningful way for everyone is difficult.  We had to make a number of decisions and assumptions to provide the most meaningful estimate for the most people.  Here is what we did:

  • We only included bank accounts, credit card and loan accounts in our calculation. We excluded any other types of accounts including superannuation and investment accounts.  We assumed this would be fine for most people who have their living expenses paid from bank accounts or credit cards and interest expenses in loan accounts
  • We excluded transactions categorised as transfers. We figured that these probably weren’t really expenses and shouldn’t be counted. If they were transfers between accounts they would have been netted off anyway
  • We only included expenditure in our calculations (debit transactions on your accounts) so this removed any income coming into accounts. This made sure we didn’t include any income that would have offset expenses.  Unfortunately, it also means we won’t have any expense reimbursements included
  • Our calculations looked at transactions in the 2016 calendar year and the number of days during the year that we had transactions for your accounts. This gave us an estimate of the number of days to use in calculating your average daily cost of living
  • We excluded MoneyBrilliant customers with less than 90 days of transactions in 2016 on the basis that anything less than 90 days of transactions wasn’t a good representation of average daily spend for the year
  • We excluded a number of MoneyBrilliant customers that had unusually high average daily spend. We know that some of our customers use MoneyBrilliant for things like tracking income and expenditure for businesses and we didn’t want these numbers impacting the calculations for other users
  • We only included MoneyBrilliant customers who had wages and salary coming into one of their accounts (though we didn’t count the wages and salary). This was to try and make sure that we only included data from customers where we had their main bank accounts connected to MoneyBrilliant

What might make my average daily cost of living expense inaccurate?

 If you’ve looked the number and just don’t believe it is correct, possibly you just don’t realise what it costs to live an average day of your life!

Seriously though, there are a number of things that might affect the accuracy of your calculation including:

  • You haven’t linked all your accounts to MoneyBrilliant – if we can’t see the transactions we can’t include them in the calculation. This is likely to result in a number that is lower than it should be
  • Transactions are incorrectly categorised – if you have transactions incorrectly categorised as Transfers or some type of income we will have excluded them
  • You incur lots of expenses and then have them reimbursed – either from your employer or family and friends. Because we have excluded credit transactions on accounts this will make your calculated average daily cost of living higher than it should be
  • You have joint accounts and some of the expenditure belongs to someone else or you have other people’s accounts linked to your MoneyBrilliant account – we will have used this expenditure in your calculation – and theirs if they use MoneyBrilliant
  • You have business accounts connected – we will have used these transactions in your calculations
  • You make payments to your superannuation fund or transfer money to other investments and these aren’t categorised as Transfers – the payments will be included in your daily spend

There may be other anomalies which we haven’t dealt with.  If you spot something that is incorrect, please let us know at connect@moneybrilliant.com.au and we will do our best to include it in our calculations.

 What can I do to make sure I get my Average Daily Cost of Living calculated next time?

 If we were unable to calculate your Average Daily Cost of Living for 2016 there are a number of things you can do to make sure we calculate it for you next time.  These include:

  • Just wait – if you haven’t been a customer of MoneyBrilliant for long we may not have had 90 days of transaction history to use for our calculations. Just waiting and making sure all your accounts are connected and refreshing properly may be enough to make sure we calculate it for you next time
  • Connect more accounts – if you haven’t connected any accounts to MoneyBrilliant yet we won’t have been able to calculate your Average Daily Cost of Living. Connecting your bank accounts, credit cards and loan accounts will make sure we can calculate it next time
  • Your accounts may not be refreshing – if your accounts are not refreshing properly we may not have had sufficient data to calculate your Average Daily Cost of Living. Make sure your account credentials in MoneyBrilliant are correct for each of your accounts and we should be able to calculate it for you next time

Share now

Peter is the CEO of MoneyBrilliant. He has over 20 years experience in banking, insurance and accounting. Peter has three sons, ranging in age from 16 to 3, is a sport and fitness fanatic and a volunteer firefighter. He is passionate about improving people's lives through making financial services more accessible.

Still searching?