I remember putting together my first budget after graduating from college. I put in all of our expenses (including some massive debt) and was so relieved to see that we could lead the life my wife and I wanted and still have some money left over.
That same feeling is what you’re after and boy do I get it. Actually this is pretty much how I felt
Its not about the fancy house or the nice car. Its about not working 60 hours a week to get by.
The good news is there are answers. Better yet there are questions to ask yourself. There are certainly big steps you can take like taking a look at the different types of budgets but your lifestyle is going to drive a lot of this discussion.
Below I’ve put together some questions you’ll want to ask yourself that will help you get a feel for the sacrifices that may be necessary to live the life you want.
How much money do you need to make a year to live comfortably is a very common question. Whether we say it out loud or not, its something we all wonder.
Take a look below and I think you’ll walk away with a bit clearer of a picture.
Some big life questions to answer
What lifestyle are you comfortable with?
Maybe the key question to ask yourself is what is your definition of comfortable. Even within my friend and family group, there are vastly different definitions of comfortable. To some, comfortable means a fairly middle of the road lifestyle while others want to be able to live in a nice home with nice cars and nice vacations.
Of anything that is discussed today this is the single biggest answer that will drive how much you think you need to make. Just remember that personal finance is personal so there isn’t a right or wrong answer. The only caveat to your answer is that you will be the one that has to live with the consequences.
If you decide you want to live with the nicest things then your number of living comfortably will be higher than some.
Are you willing to move?
This may be the most overlooked area when it comes to expenses. Are you willing to move to a lower-cost area? Is it a must to live on the coasts? There is a drastic difference in the cost of living in different parts of the country. If your entire aim is to minimize the amount of money you need to live comfortably this will be a driving factor.
The map below shows how far $100 goes in each state. Utilizing this and other similar information may help you decide where you may want to move.
How long do you want to work?
While some assume that you must work until you retire in your 60s, that isn’t necessarily true. However, if you do want to retire before that, you will certainly have to plan and sacrifice earlier on in life.
One important note to make is that, regardless of what your occupation is, you are going to have to work hard. If you determine you want to hang it up early it won’t be easy but it is definitely possible.
The primary reason is that if you want to live comfortably your entire life you’ll have to save and invest extra money earlier in life to be able to hang it up earlier than what is considered typical.
Do you want to start a family?
Another deep question here to get your mind in the right space. Do you want to start a family? If so, what kind of lifestyle do you want your family to lead?
How many children? Will they be homeschooled? Will they each need their own room?
I realize that the severity of this question just went way up but these are the types of questions you need to be answering for yourself because no one else can answer them for you.
Major expenses to consider
Now that we’ve wrapped our head around some of the major questions, another good exercise will be to think through some of the major spending categories to get a feel for where you stand on some of the major spending areas.
As you dig through these various expenses just remember that if you’re like this
then it probably just isn’t going to work. That gif makes me laugh because thats just what Target does to you. You walk in for a thing of deodorant, your bill is $63 and all you can remember you bought was the deodorant!
Are you comfortable living in the same house for your entire life? Would you prefer to live in the nicest home you can afford? These are the types of questions you’ll have to answer for yourself. The bigger the home means the bigger the down payment.
Each home switch is pretty costly when you factor in all the costs associated with the housing transaction as well as new projects and furnishings for the new home. The least amount of home switches you can tolerate the better off you’ll be.
Are you willing to coupon or are you more in the camp of eating out several times per week? In my budgeting experience, food is the silent one that adds up quickly. Its the one that you need to make a conscious decision of your lifestyle otherwise it could get out of hand.
If having a nice car is important to you it will definitely drive up your cost of living. Purchasing a high-quality car that is known to last a while is the best way to keep your cost of living low.
Now you know where you stand
After taking a look at these various questions and areas to consider I hope you have a better feel for how much money you need to make a year to live comfortably. The answer is different for everyone and there aren’t any wrong answers.
Making enough to live comfortably is everyone’s dream. The stress-free feeling at the end of the month when there is money left over in the bank account and you had a great month is definitely something to shoot for.
Now the question is how bad do you want that life? It’s great to have a desire for it but now its time to put in the work.