April 30, 2014, 5:52 am

How Much Do You Need To Live Comfortably?

by: The Financial Blogger    Category: Personal Finance
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Last year, I went through all kinds of questioning about my budget, future, job and online company. I really needed to put down on paper how much I needed to live and create a comprehensive budget.

 

Doing this exercise was great not only to focus on debts but also to realize how much I needed to live the good life in my own terms. Some people only need a couple thousand per month to live comfortably while others think they couldn’t live without spending 10K a month. It’s all about your priorities and what makes you happy…

 

WHAT MAKES ME HAPPY IN MY DAY TO DAY?

 

The first question I asked myself was what the most important things were for me. I’m not talking about my family and other personal values here but what is important in terms of material things. For example, I LOVE my house. There is no way I’m giving up my house in my budget. It fulfills all our needs and then some. We are incredibly comfortable in it and even benefit from the daycare at home (we have a separate entry and a room dedicated to my wife’s business). Living in this house definitely makes me happy in my day to day.

 

On the other hand, my RX-8 wasn’t bringing me enough happiness compared to its costs and wasn’t kept. While the car didn’t have any loan strings attached to it, gasoline and sporadic mechanical problems were enough to make me sell it. Life is a little bit more complicated with only one car and I’m considering buying a second car eventually but this will be a small economical car this time. I’m done spending money on wheels.

 

Saving money for my kids’ education and retirement also makes me happy. There is no way I’ll jeopardize their education or my retirement. This is why I’m putting almost 10K per year in my investment accounts.

 

I also love food and wine and I’m not willing to cut out much of my food bills. I’ve made some efforts with wine and restaurants but I really enjoy a nice meal with a great bottle of wine!

 

MAKING 2 BUDGETS AND DECIDE LATER

 

When I crunched the numbers last summer, I came up with two different budgets; the first one was the one I need to live comfortably (meaning I don’t compromise on anything) and the second one was the one with strict minimum expenses.

 

It had helped me to realize what I can really cut out in case of bad luck and what I could already cut today without weeping on the floor. This is how I realized I need about $4,500 monthly to live comfortably. Therefore, I need to find a way to make $54,000 net of taxes each year to keep what I have in place. Where I live, this is about 100K before tax. This is not an easy task but I have managed to reach this level of income since the age of 28 (you can read about the chronology of my income here).

 

I’m curious to know what your magic number is? How much do you need to be happy? What do you think of my number? Is it too high, too low?

 

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Comments

At my current situation – living in Sydney, single, no mort(c)age… $3000 a month with no work would be ok, $5000 would be already heaps of fun & travel. At home-country (Czech Republic) … $3000 would be enough for an apartment, fun and travel. In SE Asie, where I’m gonna move soon, $2000 is probably “all you can eat” :-)

by: The Financial Blogger | May 1st, 2014 (11:27 am)

It really depends on where you live :-)

I heard Sydney was quite expensive, is it the case?

$440 fine for parking at “no stopping” wasn’t cheap for example :) When you mention wine, I drank wine all the time in Europe, but don’t here. You almost can’t get drinkable stuff under $25 a bottle. On the flip side, it’s easy to earn the money here.

How much without any debt?

In my current home?

With my current lifestyle?

I would like/need $5,000 per month after tax in today’s dollars.

Or..a $1.5 M dividend portfolio. That would work :)

Mark

by: RICARDO DI VINCI | May 1st, 2014 (4:38 pm)

Hi TFB;
It all depends on how, where and what you want to do once you start drawing down the monies that you set aside over the years. Are you single or married. How many kids and grand kids? (all those presents). One car enough when retired or does each spouse have the need to “do their own thing”.
A lot of ifs, buts, mights and maybes so a retirment budget is not a static cast in stone thing. You will need to revise it as you go along. For some reason I keep upping mine for stupid things like hydro, tases, etc.
Presently I am at $38K net so some place around 55K gross will do me just fine with some 5K in there for vacations every year – I like cruises (to each his own).
My income will be QPP, OAS, very small company plan and my RRSP. Plus the ultimate of all retirement funds—- my kids. LOL
Hey! I invested a lot in them to get them to where they are, there has got to be some kind of payback LOL An upstairs bedroom will be just fine.
The main factor in what you need is how you want to live. You figur ethat out and you will have an idea of how much you need to maintain it. Then look at how much you have now and make a few projections to retirement date. Mine is this year so my projections are quite short and easy.
Just came upon another hick in the plan though. I went to see NOAH the movie and then read up on him a bit to see how factual the movie was. Did you know he sired his kids when he was around 500 years old???? I am not sure the money will last till then but you young guys better work longer to pay my pension LOL

Hey Jakub!

ouch! wine is even more expensive than here! I’m surprise, I LOVE Australian wine (Jacob’s Creek, Wolf Blass Yellow or Red Label, Bin 555, etc). I remember seeing very cheap wine in Europe… but I was 19 and I didn’t drink much wine back then… what a shame!

Hey Mark,

hum.. 1.5M$ dividend portfolio sounds just about right ! hahahaha!

Hello Ricardo,

I have three kids, maybe I’ll be lucky enough to create a franchise soccer player ;-) hahahaha! but I don’t expect much from them. I rather do it on my own :-)

With my current lifestyle right now and with my financial status which is I have to live from paycheck to paycheck, I am not really sure how much would I need to have to live comfortably. I still have to figure it out.

by: The Financial Blogger | May 4th, 2014 (11:25 am)

Hey Dylann,

if you figure it out first, it will help you to stop living from paycheck to paycheck. I know the feeling and it’s not fun! I hope you will be able to get out of this rapidly! good luck!

I don’t need much for things like clothes, but I do like being able to buy lunch everyday and not feel guilty about it. The cost of food is expensive where I am, but fortunately the quality and diversity is great.

by: The Financial Blogger | May 6th, 2014 (5:41 am)

Hey Untemplater, where do you live?

I wish food wasn’t that expensive period!

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To live life comfortably is to spend within your means and having no debts to worry. Life can be lived in a worry less way though spending in accords to your capacity. Once again, spend within your means.