The Most Enlightening Personal Finance Calculation I’ve Ever Done

Keeping your expenses as low as possible was best illustrated to be with some simple math, and once I got out of debt and had some REAL savings, I started calculating my expenses to get an idea of how much I needed in my emergency fund.

The exercise started with what I was currently spending, and then went to what I felt could be the bare minimum of expenses (no matter how unrealistic).

Savings = $5000

Spend: $2500/month = 2 months of savings

Spend: $1000/month = 5 months of savings

Spend: $500/month = 10 months of savings

Once I saw this (stupidly) simple basic math jump out at me, I started changing my habits as much as possible to accommodate the third option (although I am not there, nor do I ever think I will be able to reach that, and not have to give up certain modern comforts, like cutting back on food or giving up buying the pill).

So I took just my fixed expenses & made a comfortable, but not extravagant estimate for m variable expenses.

Average Basic Monthly Expenses:

Note: This is my budget if I am in crisis mode while still being slightly comfortable, although I’d probably cut back even more if I was truly out of money.

  • $400 = Rent (almost all utilities included)
  • $6 = Utilities (only electricity)
  • $8 = Laundry (we air dry in the apartment on a clothesline)
  • $30 = Cellphone & Internet (Costs are split)
  • $150 = Groceries
  • $36 = Household
  • $150 = Other (Medical, Dentist, Insurance, Gas)

TOTAL = $780

(or $1560 for 2 people)


Laundry = It’s $2 for a wash, $2 for a dry. We wash weekly & air dry instead.

Utilities = We only have to pay electricity bi-monthly.

It’s around $24 in total for 2 months because we use the lights sparingly, we live in a studio and our actual usage is a surprising $7 a month in total (or $3.50 each). The extra $10 comes just from the FEE to have an account and use the electricity.

Apartment Insurance: $90/year, split in half, is $45 each, or $3.75 a month

Car Insurance: $300/year (for my car only) or $25/month.

Other Car Fees: License plate & Driver’s License is around $40/month, but I pay yearly.

Other: Gas when I am not working is $3 a month or less. Sometimes I just walk to get food.

Medical: Inhaler & Pills are $25 a month, but I pay the whole amount.

Dentist: Around $100 per visit, once a year.

I wouldn’t be spending ~$800 each and every month, but my bare basics are more than covered by that amount. Travel not included.

With that amount, I decided that assuming $1000 a month was a good estimate, and it would be more than sufficient, giving me lots of room to breathe just in case I needed it while in crisis mode.

It was the simplest math I’d ever done (except for basic budgeting), and it absolutely changed everything.

I saw money differently, and I saw watching & reducing my expenses as being another step towards financial independence & freedom, rather than feeling like stepping towards a financial prison.

Bottom line: If you spend less, you can save more money and your savings will last even longer.

… but you already knew that 🙂

About the Author

Just a girl trying to find a balance between being a Shopaholic and a Saver. I cleared $60,000 in 18 months earning $65,000 gross/year. Now I am self-employed, and you can read more about my story here, or visit my other blog: The Everyday Minimalist.