How to calculate monthly living expenses

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When calculating your monthly living expenses we’re focused on the financial aspects of your lifestyle.

Income – How much money are you bringing in each month? This includes income from your paycheck and any other sources (side hustle money, alimony, support, Social Security, business income, dividend payouts, and interest payments, etc). Use the net income number after taxes and contributions are made. Or you can also tally up your annual income and divide by 12 to get your Monthly Income.

Expenses – What are you spending on? These expenses are both fixed and variable. They include:

  • cost of housing (mortgage/rent),
  • utilities (water, electric, gas,)
  • subscriptions (cell service, streaming services,)
  • insurance (auto, home, life, renters, pet),
  • dining and entertainment,
  • groceries and household supplies,
  • home and car maintenance,
  • transportation (car payments, fuel cost, tolls, tickets, public trans)
  • healthcare (copays, OTC medicine, prescriptions),
  • and also the expense of paying yourself first (which you must do).

Debt – What are your obligations to creditors and family or friends you borrowed money from. Those payments are expenses too. Think credit cards, personal loans, and any other loan you didn’t include in living expenses such as mortgage payments, car payments, and other financing.

How to calculate your monthly living expenses

  1. Add your Expenses and Debt which results in your Living Expenses.
  2. Subtract your monthly Living Expenses with your Monthly Income and you’ve just calculated your net cash flow.

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