So I was trying to determine how much id need to earn in order to live my “ideal” lifestyle. What is “ideal”? There are a thousand ways i couldve imagined it but for this exercise i chose a lifestyle that was mostly realistic relative to my currently lifestyle aside from large bumps in two major categories (see below).
Here’s how I did it.
- Go into my Mint account and write down my average spending in the following categories:
Home/Rent Shopping Entertainment Other Food/Restaurants/Groceries Auto (car payment + insurance + gas + Uber)
These are Mint’s primary categories and they are totally inclusive of my current spending habits.
- Then I went through category by category and amplified that budget according to how much more id need for each category in my ideal lifestyle.
Personally, I wanted to run this exercise specifically around 1 thing: tripling the amount of money I spend per month on rent - because when i think about my ideal lifestyle this is the one area id really value an improvement in. In all other categories i padded them by 10-20% but they stayed relatively the same. Finally, if I were to live in a larger place id need to furnish it so i included a budget for that as well.
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After that, and this was the important one for me, I baked in budget for savings/investing. I decided that in this ideal scenario i would be saving 1/3 of my total salary (which i havent totally determined at this point so for now i’ll say 10k per month). The reason I made this so high is that if im going to spend lavishly on my Home, then i want to save lavishly for my future. It allows me to not feel guilty thinking “Well yes i can technically afford this nice house, but is it irresponsible of me to do so? If I werent spending all this money on rent every month then that could be going into my investments.” Going this route, I instead bake the investments in first to relieve that ambiguous worry.
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Finally, I added all of that up, multiplied by 12 to get my after tax salary. Then i worked backwards adding taxes back in to land on a final target salary number.
After this, I simply cross checked my original estimate of 10k per month In savings/investing and it was pretty close to 1/3 so i left it as is.
- Now i have a target salary number to aim for that will allow me to “guilt-free” live the lifestyle i want. I say guilt free because i baked in an aggressive savings/investment plan which allows me to feel more comfortable spending as much as Id be spending in those other areas that are important to me.
Please note: i have no debt and have both an operating fund in a checking account and a full emergency fund in savings.
Anyway, I know this is nothing new but I found it to be both a helpful and inspiring exercise. That number is not as crazy as I imagined it would be, well within reach.
I’m just a novice budgeter here so please let me know if you’re seeing any glaring holes or flaws in this system!
Submitted May 08, 2020 at 08:35PM by ttyytt055 https://ift.tt/35PNkmT
