Struggling to figure out how much you should spend each month? Here’s a simple breakdown. Let’s say your salary is 60k per year. After taxes (around 25% for Medicare, federal, state, etc.), you’ll bring home about 45k annually. Next, you need to calculate your fixed monthly expenses, which include bills for utilities, housing, car payments, loans, and so on. For example, if your energy bill averages about $130 a month, that’s a good starting point. Sometimes it might be a bit less, like $110, or a bit more, like $140, but on average, let’s keep it at $130. Now, if your total fixed costs for the month is around $2500, that amounts to $30,000 annually. From your take-home pay of 45k, subtract your fixed costs: 45k - 30k = 15k left over. This means you have $15,000 for the year to spend on everything else. Dividing that by 12 months gives you about $1250 to spend monthly on groceries, entertainment, dining out, and more without overextending yourself on credit cards. If you spend more, like $1500 a month on fun stuff, that totals $18,000 for the year. Adding that to your fixed costs gives you $48,000, which exceeds your take-home pay of 45k. This can lead to using credit cards or borrowing, which isn’t sustainable. So keep this strategy in mind for a broader view of your annual expenses. For tracking your monthly spending, I recommend using a spending tracker spreadsheet. Yes, there are apps, but why put more of your personal data out there? I’ve created multiple templates to help me save and meet my financial goals. If you want to check them out, feel free to reach out. I can send you a free download of one of my templates.
This is super helpful! I’ve been trying to get a handle on my spending, and this breakdown makes it easier to understand.
I love the idea of using a spreadsheet instead of an app. I feel like I have more control that way. Do you have any templates for beginners?
I’ve always thought budgeting was complicated, but this makes it seem straightforward. Thanks for sharing!
So if I understand correctly, staying within that $1250 monthly budget is key to not overspending, right?
I think I might need one of those templates. Budgeting has always been a struggle for me.