How Much Money Do You Need to Live Comfortably?
December 11, 2020
How much money do you need? How much per year? How much per month? What is a comfortable life and how much money do you need to get there? These are big questions you may find yourself asking when you are looking at your family’s finances. You may feel like you bring in a good income, but you still feel like you don’t seem to have enough for what you want.
What Do You Spend Your Money On?
If you don’t know the answer to this question, it’s the first thing to address. Many adults don’t have a personal budget, and when asked where their money goes, only have the vaguest idea of what they spend and where. You can’t adjust if you don’t know where to begin. Start by tracking where every dollar goes for at least a month. Phone bill, electric, lunch, coffee, detergent, and anything else you buy. If you’re diligent in documenting where every dollar goes, you should have a very realistic view of your finances. Then you can sort out your expenses and start to set some budget goals.
Defining Living Comfortably
Once you know what you have been spending your money on, you can adjust your budget and determine how to move forward. Comfort is different for many people. Some people are naturally frugal and minimalist. Others define comfort as having plenty of money for travel. Others define comfort as not having to deprive themselves. There is no one answer to how much money you need to live comfortably, because it will vary wildly from person to person. Ideally, you want to spend the minimum amount of money before your comfort begins to suffer.
· Transportation
You need something to reliably get you from point A to point B. Think about what your family actually needs. Can you get by with one car? Some families can, some can’t. Do you really need an SUV or can you get by with a sedan? Do you need all the fancy features? Think about everything that will go into your car choice, because it’s more than just the purchase price. How much will a car cost to maintain? How much will you spend on gas?
· Food
No one is suggesting that you need to live on the cheapest processed foods, but you can look at your food budget and determine what is worth it to you. There are plenty of things where the generic is indistinguishable from the brand name. But if you have a coffee that you love and it makes your mornings happy, you don’t need to give it up.
· Home
This is most important to think about when you’re purchasing your home. How big does your home need to be? If you will have more than one “spare room” you probably have a home that is too big. A smaller home is easier to clean and cheaper to maintain.
· Essentials
You need to have food, clothes, shelter, electricity, water, and heat. In today’s world, most people will argue that they also need a phone and internet-especially now. Insurance on your home and car is extremely important, and you will need to pay taxes. These bills aren’t optional, but that doesn’t mean that they aren’t negotiable. Being smart about your spending can allow you to save money while still living comfortably.
· Possessions
Most of us have been conditioned to want plenty of “stuff” to feel that we are doing well financially, but this really isn’t the case. Moving to more of a minimalist lifestyle can actually bring much more pleasure. Cleaning and organizing are much easier when you own less things. When trying to determine what you need to feel comfortable, consider what you really want.
· Non-Essentials
This is a big category. You don’t need these things to survive, but they can make your life more fulfilling. Do you have a hobby that brings you joy? Do you love to travel? Are you a person who yearns to dress stylishly? Do you relish collapsing in front of your TV for a Netflix binge? All of these things are ok to enjoy! When you budget, think about what you’d really miss if it were gone.
Using a Personal Budget to Be Smart About Your Spending
Until you have a personal budget, finding out how much you need to live comfortably is a nearly impossible task. Breaking down your expenses into categories and determining how much income you really have to work with can set you on the right track.
Developing a personal budget can be overwhelming if you’ve never done one before. There are plenty of apps out there to help, but speaking to a financial expert can help you get on the right track! Contact Safe Money Partners for more tips on spending (and saving) smartly.
By Jeff Mohlman