This Is How Much I Should Be Spending A Month

My Ideal Monthly Budget

 

This is what my ideal monthly expense should be. And this would already be a pretty comfy lifestyle.
This is what my ideal monthly expense should be. And this would already be a pretty comfy lifestyle.

 

I’m Living The Good Life

So, my total expenses should be in the $1,200-$1,400 range monthly. Unfortunately, as I posted just a few minutes ago, my expenses are ranging in the $2-3k range a month.

Since my condo is paid off I only should have HOA dues and property taxes to worry about. Home maintenance is mostly labor which I should be able to provide myself.

The podcast, gym, financial adviser and home internet are sort of necessary. I could do without them… for a total savings of $247 per month but that would be crossing the line of efficiency.

What my ass needs to be cutting out is the coffee shop visits and the drinks with friends for entertainment. Even though I have that listed for a total of $350 per month the truth is it’s more like $800 per month. Yes, embarrassing really… but it’s a work in progress.

Passive Income From Investments

My total expenses from the spreadsheet above are $1,431. And in order to make this amount from my job I would have to work two 10-hour shifts per month. But my goal is to not have to depend on work-income. In order to make this money passively from my investments ($17,172 per year) I would have to have approximately $500,000 invested. 

Quick Review Of Passive Income

Why is there such a thing? Does the company pay me for my handsome face? No, of course not! They know damn well how ugly my mug is. When I invest in stocks or mutual funds these companies use my money to invest it back into their growth. They sometimes will pay me dividends in order to entice me to continue investing with them. Or they know that more people will buy their stocks which will drive the price of each stock up – another way for my money to grow.

Something similar happens with bonds which is basically money that you lend to an entity. A bond fund has a yield, think of it as an interest on the money you lend them.

So, I invest my money in stocks and bonds and usually it grows over the long-term or even short-term. As for how much, nobody knows. But, based on how the market has been for however-many-years it’s likely to allow me to profit somewhere in the 3-5% range (let’s say 3.5%) in the long-term after fees and taxes.

The quick math is that for every $100,000 that I invest I can expect to earn $3,500 every year on average. In order to cover my expenses of nearly $18,000 per year  I would need to invest $514,285 ($18,000/0.035).

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