How to Calculate Monthly Living Expenses

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It can be difficult to know where all your money goes between your monthly bills, daily necessities, and the little things you buy along the way. If more cash seems to be going out than coming in, a great way to get control is to set aside some time to calculate your expenses.

Start by gathering all your financial statements to calculate monthly living expenses. If you take a step-by-step approach, you’ll have a clearer picture of your monthly expenses.

  1. Gather your financial statements. These documents include bills, banking and mortgage statements, and other financial account statements that can help you see exactly where your money is going.
  2. Look for charges you make regularly. This can help you determine your largest expenses.
  3. Create a list of monthly expenses. Includes your recurring living expenses, such as your rent or mortgage, utilities, and car payments. It also includes variable expenses like groceries and discretionary expenses like clothes.
  4. Examine your expenses. To find patterns in your spending, try organizing your purchases in an expense worksheet. Start to distinguish between different types of expenses. Consider separating your expenses into the following three categories: fixed, variable, and discretionary.

What are you spending on?

Expenses – 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 debt.

And for good measure, calculate your monthly income.

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).

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.

Jason Vitug

Jason is the founder of phroogal, creator of the award winning project Road to Financial Wellness, and author of the bestseller and New York Times reviewed book, You Only Live Once: The Roadmap to Financial Wellness and a Purposeful Life.

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