How much does your lifestyle cost?

If you can’t answer that question off the top of your head, grab a pencil and start adding.

Like I talked about in one of my first posts, a crucial first step to managing your money is understanding it.

That means you need to know exactly what your spending is, probably at two levels: your bare-bones monthly expenditures and your typical average spending.

Your bare-bones expenditures are all those things you can’t immediately get out of, which should be mostly made up of necessities. For me, it’s rent, utilities, groceries, my cell phone, car insurance. I know exactly how much I spend on each of these things in an average month, so I know how much I need to maintain my basic lifestyle on a monthly basis. This calculation is a good way to know how much you need in your emergency fund.

I also know that if I add in my discretionary spending, on things like travel, going out, shopping, music, and other fun things, I spend a few hundred more per month. This number is, obviously, how much it costs you per month to live your life the way you’re currently living it. This number absolutely 100% certainly must be less than you’re earning.

Once you know these two numbers, you’re way ahead of the game.

Most of us postgrads aren’t guilty of making giant extravagant purchases. We are guilty of saying, “oh, it’s only ten bucks, whatever” … over and over and over. Calculating your monthly spending can help you see (and, if you want to, stop) those patterns.

I was talking to a friend about money recently (awesome side effect of this blog: getting to talk budgeting with my friends, which is probably my second-weirdest hobby after researching rental apartments in places I don’t live) and asked him how much he was spending monthly. He didn’t know.

I think that’s pretty typical: we know how much rent is, and maybe have a general idea of other bills, but beyond that we aren’t really sure. In college, I could’ve told you my monthly spending in a heartbeat (about $600, a benefit of having six roommates and a house with a bathtub falling through the dining room ceiling). About a year after graduation, though, I realized that I was somehow managing to just blow through quantities of money I’d never had before.

As soon as I knew those numbers (especially discretionary spending), decreasing them was easy. And even if it’s not easy, at least you’ll know where you’re starting.

After all, as my 5-year-old self would say, Nala is power.

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