How to calculate your disposable income

What disposable income measures

Disposable income is the amount left each month after your fixed costs have been paid. It is what funds food, fuel, clothes, going out, medical costs that are not reimbursed, and savings. Unlike your account balance, which moves from day to day, it is a stable monthly measure.

It is not the same as net income: someone on €3,000 who pays €1,900 in fixed costs has €1,100 of disposable income, whereas someone on €2,400 with €900 of costs has €1,500. The second income is lower, but the margin is wider.

The formula and what to count

Disposable income = monthly net income − monthly fixed costs. The whole challenge is being exhaustive on both sides.

• Income: net salaries, regular benefits, pensions received, rental income. Leave out irregular bonuses and one-off income.
• Housing: rent or mortgage payment, building service charges, property tax (taxe foncière) divided by twelve.
• Energy, water, internet, phones, insurance (home, car, top-up health cover).
• Existing loans, maintenance payments, childcare, school fees and canteen, transport passes.
• Income tax, if it is not already deducted from your salary.

What banks count, and why your own calculation is stricter

When you apply for a loan, the bank mainly looks at your financial commitments: existing loans, your current rent in some cases, maintenance paid, taxes. It calculates your disposable income once the new monthly repayment has been added, and checks that it does not fall below a threshold of its own, which varies from one lender to another.

Your personal calculation should go further: energy, insurance, subscriptions and your phone are not loans, but they are just as unavoidable, and they leave your account every month all the same. That is stricter, and it is fairer: this is the figure you actually live on day to day.

An example: a family of four

Célia and Marc have two children and together take home €3,900 net a month. Their fixed costs are as follows.

• Rent: €1,050
• Insurance: €95; energy: €130; internet and mobiles: €60
• Car loan: €220; subscriptions: €45
• Total fixed costs: €1,600

Reading the result

The family’s disposable income: 3,900 − 1,600 = €2,300, or €575 per person and 59% of income. To judge this figure, divide it by the number of people in the household. Our simulator uses three benchmarks, specific to this site and with no official standing: under €400 per person per month, the situation is critical; from €400 to €699, it is tight; from €700, it is comfortable. The family in the example is therefore in the “tight” zone: everything gets paid, but an unexpected €300 bill is felt.

These thresholds do not account for everything: a child costs less than an adult, a big city more than a small town, an essential car more than a life on foot. Use them to compare your months with one another, not to judge yourself. What matters most is the trend: a figure that keeps improving month after month is good news.

How to improve it

Start with the biggest item, almost always housing. If rent exceeds a third of your income, there is little to gain elsewhere. Then go through the contracts you can renegotiate: insurance, mobile and internet plans, top-up health cover. Three items each cut by €20 add up to €60 a month, or €720 a year.

Unused subscriptions come next, then consumer loans: consolidating or repaying early a high-interest loan frees up monthly cash. If your disposable income is zero or negative, do not stay on your own: the Points conseil budget (free, confidential budget advice centres in France) exist for exactly that.