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)
Notes:
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 🙂
Just a girl trying to find a balance between being a Shopaholic and a Saver.
I cleared $60,000 in 18 months earning $65,000 gross/year.
Now I am self-employed, and you can read more about 
Ha ha! Yeah I even knew that! I wish I could practice the same. To have a consistent spending ranging 800.00 US$ to 1,000.00 US $ a month is hard to bit.Identifying your cash flow is a smart move to know your actual finances, but to practice and to stick by it? That is another story.
You are true, the only way to save us from financial imprisoment is to sort our savings 🙂
This was a good post, a good job breaking down your monthly spending, and the projection was applied well too. Some people have a harder time putting words down on a screen into a more comprehensive manner. I’ve just sent you over a contact message with a way that could of added some value and visuals to this post!
You also have some incredibly cheap insurance! Do you drive a scooter or something shesh
Fascinating. Where on earth do you live/what on earth do you eat that you can spend $150/month on groceries for yourself and not starve to death?? Seriously, because I want to move there. I haven’t managed that kinda food budget since the early 90s, due in large part simply to the cost of food in the SF Bay Area. I shop at farmer’s markets and discount groceries, and whenever I can I buy in bulk, freeze some or split the packages with friends. I also, quite honestly, don’t eat much. (And I buy fresh type food not processed, which is often cheaper.) Still I can’t seem to get it down below about 100 a week. (Though that does often feed 2 people.) But still, 🙁 And your electricity is freaking unreal. Wow. We are under the thumb of PG and E here–quite possibly the most evil utility company ever. (They have literally gotten away with murder.) I have a 1000 sq foot house and even with keeping everything off unless I am using it I never get down to less than $150 a month. Even when I had a studio flat in the 90s it was usually around 60-75 and I seldom used my heater. *sigh*
Wow, you can live pretty cheaply. I wish my budget looked like that!
Thanks for the post! We all know that it’s common sense (or should I say cents!) I’m terrible at this and I know I need to button this up a lot more.
I used to run a household for about £3000 a month for two people. It felt like I had no control over my life since I had to work full time to pay my share of that. However, now that I’ve pared that down to under £1000 a month, I have far more choice about what work I do, and a lot less stress.
Cutting down on outgoings is much easier and less stressful than increasing your income.