It's a Wednesday evening, the 18th of the month. The joint account shows 1,600 €. A friend has found a flat in the Algarve for a week and needs a 500 € deposit by Friday. The account says yes. This is the moment to stop for a second. Today's balance is a photo of the past. It shows what came in and what has already gone out. It tells you nothing about the mortgage that leaves on Monday.
The number that matters is a different one: the lowest point your balance will reach before the next salary lands. Here is how to find it with your bank app and twenty minutes.
Why today's balance misleads
Most households in Portugal are paid once a month, near the end of it. The bills are spread across the month: the mortgage or rent, electricity, school, the phone, the gym, the car insurance someone split into two payments. Around them sits the drift. Groceries, fuel, a coffee, a birthday present. None of it is dramatic, but it adds up.
So the balance usually falls through the month and reaches its floor a day or two before payday. If you decide on the 18th using the 18th's balance, you are working from the most flattering figure you will see until the end of the month.
A worked example
Same household. Two salaries, a mortgage, two children, one car. Today is the 18th, the balance is 1,600 €, and both salaries arrive on the 30th. That leaves twelve days.
Planned payments before the 30th:
- Electricity and gas, day 20: 110 €
- Mortgage, day 22: 780 €
- Phone and internet, day 24: 60 €
- School canteen and after school care, day 25: 180 €
- Car insurance, half yearly, day 27: 240 €
- Subscriptions, on various days: 40 €
Total planned: 1,410 €.
Now the drift. Over the last three months, card spending that was not a fixed bill came to about 900 € a month. That works out at roughly 30 € a day. Twelve days of it is 360 €.
The forecast: 1,600 minus 1,410 minus 360 leaves you 170 € below zero. The lowest point falls on the 29th, the day before the salaries arrive. Add the 500 € deposit and it is 670 € below zero.
Nothing in this family's life is out of control. The forecast just sees what the balance can't.
Build your own in twenty minutes
- Pick the account that pays the bills. If there is a joint account and two personal ones, start with the joint one.
- Write down today's available balance.
- List every planned payment for the next 30 days, with its date. That means direct debits, standing orders, card instalments, and the credit card bill if it comes out of this account. Last month's statement will remind you of the ones you forgot.
- Add your income, with dates. Be conservative. If payday falls on a weekend, use the later date. In the months with the extra holiday and Christmas pay, remember that money is real but often already spoken for.
- Estimate the drift. Take three months of statements, remove the fixed bills and transfers, add up what is left and divide by 90. That is your daily drift.
- Walk forward day by day to the next salary. The smallest figure you write down is your lowest point.
When the lowest point is below zero
Below zero is not a crisis. It is information that arrives early. Here are your options, roughly in order.
- Don't move money out. The holiday deposit, the transfer to savings, the extra mortgage payment can all wait until after payday.
- Move a date. Insurers, gyms and schools will often change a debit date or split a charge if you ask before it is due. One phone call can push 240 € past payday.
- Trim the drift for a few days. Spending 10 € a day less for twelve days saves 120 €. Plan meals from what is already in the fridge.
- Use the savings that exist for exactly this. An emergency fund covering a timing gap is doing its job. Move back only what the forecast says, plus a small margin.
- Avoid the unplanned overdraft. In Portugal an unauthorised overdraft (descoberto) usually means interest and fees, and a returned direct debit can bring its own charge. Look these up in your bank's price list (preçário) rather than guessing.
Then add a margin. A sensible target is a lowest point at least one week of drift above zero, which for this family is about 210 €. So the real gap was not 170 € but nearer 380 €.
What the forecast doesn't know
It doesn't know the washing machine is about to break. It doesn't know that a card payment from last week will only clear tomorrow, or that your IRS refund will arrive later than you hoped. Drift changes with the season too: September, with school books and new shoes, costs more than February. Treat the forecast as a good estimate. Redo it when something big changes, and keep the margin.
If you would rather not do the day by day walk by hand, Household builds this forecast from your planned payments and usual spending and shows you the lowest point of the month. Either way the habit is the same: check the floor before you move money.
FAQ
How do I know if my money will last until payday? Take today's balance. Subtract every planned payment before payday, then subtract your average daily spending multiplied by the days left. If what remains is more than a week's spending, you are fine.
What is a household cash flow forecast? A day by day estimate of your balance over the coming weeks, built from known bills, expected income and usual spending. The most useful thing it tells you is the lowest point.
When should I move money into savings? Straight after payday, but only the amount your forecast says you can spare while keeping the lowest point above your margin.