Have you ever stopped to figure out how much money you blow through on a daily basis to keep up your current lifestyle? I don’t mean glancing over a spreadsheet of the month’s debit or credit card transactions, or acknowledging a message from “Mint” that you’ve been spending too much money on restaurants lately. I’m talking, absolutely everything you spend money on in a full calendar year, divided by 365.
I don’t think I’ve asked that question to anyone who did know their number.
I actually know mine. Or more precisely, I know what mine was a month ago when I was living in the city (Vancouver, Canada, specifically). The reason it even occurred to me to figure mine out was because I come from a backpacking background – when you have X number of dollars to last you X number of days, you must adhere to a daily spending allowance, or run over budget. Usually I do just that when travelling, but it is always very important to feel guilty about it each day :
Before I tell you what it was, let me point out two things: Vancouver absolutely has one of the highest costs of living in the entire world, and, I am a fairly frugal person. Some even call me “cheap”, however perhaps true at times, I think that’s a little extreme to be a rule.
Staggering, isn’t it. At least I think it is. I will bet though that almost anyone who lives in an expensive city somewhere in the world blows through a very similar amount of money as I was doing. Be sure to include all the obvious things of course: bills, rent, food, drinking, entertainment, etc, but don’t ignore things you want to forget about, like: annual car insurance and surprise car repairs, flights to other places, money you blew through at a stag in Vegas, clothing, haircuts, daily coffees, bus fare, new TVs, banking fees, the list goes on…
So over the course of a year, I was spending around $55,000. And considering I was making around $90,000/year before taxes had been taken off, early retirement wasn’t looking so good (or retirement at all, for that matter).
Living out of the city now, my number ought to be roughly half what it was according to my loose calculations. The key is finding a way to not make half what I was (though I certainly expect to make less now…) In any case, it feels a little less out of whack this way.
Certainly my mission will have been completed once I’ve moved over to a sunny beach in S.E. Asia or Central America where I can live comfortably for around $20/day. That’s less than 1/7th of what I was spending – I can take 6 weeks off for every 1 week I work! (err… that might be a little optimistic :)
I think knowing your number is a very important thing to know if you ever plan on not working before you die. It puts things into perspective; it makes you think twice about every purchase you make, and whether or not that purchase is actually necessary. Money saved is truly money earned.