True Living Expenses

Don’t Let Those Pesky Non-Monthly Bills Ruin Your Budget – Know Your True Monthly Expenses

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Want to set yourself up for budgeting success?

Then knowing your true monthly living expenses is essential. 

Our monthly expenses go beyond our monthly bills. But so often when we begin budgeting, we forget about the expenses that we don’t pay for each month. 

Forgetting these can easily throw off our budget, leading us to get frustrated –  possibly to a point where we quit budgeting all-together.

This was a major reason I struggled with my budget in my early budgeting years. I forgot about those pesky annual fees/bills or the haircut I got every few months. 

They would pop up, seemingly out of the blue, and I would have to scramble to find the money to cover the expense. My savings goals would often suffer, and then I would feel like a budgeting failure. 

But I don’t want you to feel like a budgeting failure. I want you to create a budget that encompasses all of your true living expenses to set you up for budgeting success.

Let’s get started. 

What Are True Monthly Living Expenses?

Your true monthly living expenses are all of your expenses, even the ones you don’t get a bill for each month. 

And they go beyond our monthly bills and the goods you buy each month. 

Think of your true living expenses as anything that incurs a cost, even when you aren’t billed for it. 

By doing so, you will have a better understanding of your true cost of living each month and better able to create a budget that you can stick to.

Why Understanding Your True Living Expenses is Essential to a Successful Budget

Most of us can easily list our monthly bills. 

But what we often forget when setting our budgets are those bills or expenses that may not occur each month, like subscription fees or insurance premiums.

For example, let’s say you have a $480 auto insurance payment every 6 months. Even though you only incur the cost of $480 every 6 months, it is costing you $80 per month ($480/6 months) for car insurance. 

If we forget to include that $80 per month in our monthly budget, then we are going to be hit with an unexpected bill for $480 every 6 months. 

When you understand your true living expenses, infrequent as they may be, they start to feel like monthly expenses.

And when we treat all our expenses like monthly expenses, you will set yourself up for budgeting success.

Living Expenses List Example

Everyone’s monthly living expenses will be different. Here is a list of expenses to get your brain juices going about what your true monthly living expenses are. 

Note: some of the bills I have marked as monthly may be non-monthly for you, and vice-versa. This is simply a list to get you thinking. 

Monthly Bills 

  • Rent/Mortgage
  • Utilities
  • Cable/Internet
  • Streaming Services
  • Cell Phone
  • Gym Membership

Non-Monthly Bills

  • Water/Sewer
  • Auto Insurance
  • Home Insurance
  • Property Taxes

Variable Expenses

  • Food
  • Clothing
  • Transportation (gas, parking, tolls)
  • Household goods (toilet paper, etc)
  • Medical co-pays and deductibles
  • Car Maintenance
  • Home Maintenance
  • Vacations
  • Gifts
  • Personal Care (Hair cuts, etc)
  • Dining Out
  • Fun Money 
  • Pet Care

How To Figure Out Your True Monthly Living Expenses

1. Brainstorm Your Living Expenses

Use the list above to get you thinking. 

Start by listing out your monthly bills and variable expenses each month. Then expand your timeframe and think about all of those other expenses that creep up throughout the year like medical expenses and non-monthly bills. 

If you need additional help thinking of all of your expenses, check out this massive list of budget categories I put together. It will definitely help get your brain thinking.

2. Determine How Much Each Expense Costs You Per Month

This will be different for each type of expense.

Monthly bills: 

This will be the amount of the bill you pay each month. Boom. Easy peasy.

Non-Monthly Bills:

Divide all of your non-monthly bills by the number of months they cover. For example, your $480 6-month car insurance bill would be divided by 6 to give you $80/month

Variable Expenses: 

If you track your expenses then you can use this information to determine how much you spend, on average, each month. 

If you are just starting budgeting, you may have to make a best-educated guess on this one by looking at old bank or credit card statements. 

For a category where you know you spend money every month, like groceries, take your best guess at how much you think you spend each month. For categories where you don’t spend money every month, like car maintenance, take a stab at how much you think you may spend in a year and divide it by 12 to get your true monthly expense.  

3. Add Up Your True Monthly Expenses

To figure out exactly how much it costs for you to live your life each month, simply add up all of your monthly expenses. 

And there you have it. This is your true monthly cost of living. 

Knowing how much every expense costs you each month will help you set up your budget for success.

Now let’s look at how to use this new knowledge to set up a successful budget.

How to Budget Using Your True Monthly Living Expenses

The key here is to think about every single one of your expenses as something that you pay for each month, no matter if you actually incur the expense in that month or not.

For your budget, that means setting aside money each month for that expense. The amount of money you set aside is the amount you determined to be your true monthly cost of that item using the method above. 

Sticking with the car insurance example, for your $480 6-month bill you would set aside $80 each month in your budget. 

Doing this will help you build up a stash of cash so that when the bill comes due or an expense occurs, the money is waiting for you. Doing this is also known as creating a sinking fund and is a game-changer when it comes to budgeting. 

Here is a snapshot of my budget in YNAB, my favorite budgeting tool, to show you how I account for my non-monthly expenses each month. 

Image of YNAB showing monthly living expenses

As you can see, I set aside money each month in my non-monthly expenses even though I don’t pay for them each month. This way I know I will have the money waiting for me in my sinking funds when the bill comes due.  

This is my favorite trick to budgeting success. 

You Got This

Budgeting can be a tricky and frustrating thing, especially when you are first getting started. 

By accounting for your true expenses each month you have a better shot at creating a budget you can stick with. And, better yet, you will feel in control of your money. 

No more “shit, I forgot about that up and coming bill.” to bring you down. 

So get after it. 

Start that budget, include all those irregular expenses, and be the boss of your money. Or if you are already budgeting, make sure you have your budget set up to account for non-monthly expenses. 

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Picture of Melody Creator of Cash for Tacos

Hi! I’m Melody and I want to help you create a vision for your life and provide you the necessary tools to use your money to make your vision a reality. 

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