Burn rate
How much money you are spending per day or per month, on average.
Burn rate is the pace at which you are spending — usually expressed per day or per month. In a business it says how long your cash lasts; in a household it says whether the current period is tracking to finish inside its limits. It is a rate rather than a total, which is what makes it useful partway through a period when the total is not yet meaningful.
Worked example
Twelve days into a 30-day month you have spent $1,560. That is a burn rate of $130 a day, which extends to about $3,900 for the month. Against a $3,600 budget you are running roughly $300 hot with 18 days to adjust — while adjusting is still possible.
Common mistake
Projecting from too little of the period. Three days in, one large purchase can imply a monthly total that is pure fiction. A projection is only worth acting on once enough of the period has elapsed for the daily average to mean something.
Related terms
Zero-based budgeting
Assigning every dollar of income a job until nothing is left unassigned.
Sinking fund
Saving a little each period for a known expense that is not due yet.
Envelope budgeting
Setting aside a fixed amount per category, where what is left carries forward.
← Back to the full glossary.
Let Fin handle the jargon for you
Connect your bank and Fin sorts your income, expenses and GST automatically — so terms like this just become numbers that are already worked out. Free to start, no card needed.
Get 2Fin free →