How much money do i need to make a month

Self-deception is the worst thing you can bring to the process. Say you know you’re spending a hefty sum on eating out, travel or clothes. How do you envision your lifestyle?

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Most people look forward to retirement. This is a period of life in which you can step away from the grind of daily employment and follow your dreams. In a perfect world, everyone would be able to retire without worry or regret. Unfortunately, many people monyh to prepare financially. This article was co-authored by Michael R.

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After they share this with me, I immediately ask them this one simple question:. Some of you may think that I live a lavish lifestyle, and some of you may think that I live a frugal lifestyle. I personally think I am somewhere in the middle. I know if I got married and had kids, my expenses would shoot through the roof. Obviously, everything else would double, if not triple, in order to support a family except the partying, of course.

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Most people look forward to retirement. This is a period of life in which you can step away from the grind of daily employment and follow your dreams. In a perfect world, everyone would be able to retire without worry or regret. Unfortunately, many people fail to prepare financially. This article was co-authored by Michael R.

Michael R. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas. Categories: Featured Articles Financing Retirement. Log in Facebook Loading Google Loading Civic Loading No account yet? Create an account. Edit this Article. We use cookies to make wikiHow great. By using our site, you agree to our cookie policy.

Article Edit. Learn why people trust wikiHow. Co-authored by Michael R. Lewis Updated: October 22, There are 27 references cited in this article, which can be found at the bottom of the page. Determine basic living expenses. An important first step is to determine the amount necessary to cover basic living expenses each year. There are different perspectives on how much this will be.

Some experts believe you should simply calculate your current expenses. Then, expect you’ll need about the same amount to live on once you retire. From this perspective, the amount you need each year will be about the same as you need.

Others believe that many retired people can live on about 65 percent of their working income. This assumes that you have paid off your house and you aren’t expecting to retire in luxury.

Whichever approach you opt for, you’ll need to add up all the routine necessities of living. This should include: Any housing costs you expect to have after retirement Average monthly utilities e. Food and clothing Transportation Insurance Any other monthly bill you still expect to pay after retiring e.

Their costs for transportation come in the form of auto insurance, gas, and routine maintenance. This only covers the most basic expenses. Calculate extra expenses. Many people have plans to pursue new interests or hobbies during retirement. Many parents have continuing financial responsibilities for disabled children. Others have health problems that will add expenses. You should include these future costs in your projected retirement income need.

Add the extra costs that you might face during retirement to your base retirement need. Here are some examples: Andy and Mary recognize that, due to family history, one or how much money do i need to make a month other is likely to need long-term nursing care. Bill likes to restore American automobiles manufactured before Sally likes to take her grandchildren to a major theme park for a weekend every year.

This may not seem like much, but if she doesn’t budget for it, she might not be able to do take them next year. Include travel expenses. Many retirees want to see the world in their free time. If this is something important to you, you’ll need to add this to your monthly cost estimates as.

Be as specific in your estimates as you. If you and your spouse intend to travel, what is the likely annual cost? Will you travel 30 days a year or days? Will your normal living costs at your home base decline if you are traveling?

If so, by how much? This included fuel, upkeep, food, and other travel expenses. They expect to travel during coldest days of the year when snow is on the ground, or about days per year.

Bill and Sally want to take a trip to visit their children on the east coast every year. This figure would be added to their base budget. Recognize the impact of inflation. Inflation will reduce the value of the money you save.

You must consider this in your calculations. You can calculate how much more money you’ll need in 15 years by multiplying your annual need by one plus the rate of inflation, raised to the fifteenth power. If we assume a conservative projection of 3. Many online retirement calculators will compensate for inflation. Using one of these tools is strongly recommended. You can also calculate how much you will need in an Excel spreadsheet.

In the last years, the United States economy has experienced 13 years of deflation and 87 years of inflation. Excludingevery year since has experienced inflation ranging from 5. Consider post-mortem obligations. Any sums that must be available after your death reduces the amount available to you during your life. This includes any money you wish to leave to a surviving spouse or heirs. Determine how much money you’d like to leave to each person you want to leave something.

To make sure your wishes in this area are carried out, consider drawing up a will so that your money is distributed the way that you want it to be.

Predict the length of your retirement. How much you need to retire will hinge on how long you will be retired. This means you’ll need to estimate how long you expect to live. The Social Security administration provides averages for men and women retiring at different ages. Consulting this table is a good place to start. Do people in your family tend to live into their late 90s? If so, your prediction should probably be in that range, above the average life-expectancy.

On the other hand, if people in your family tend to die young, or if you have already experienced a lot of serious health problems, a lower estimate might be more realistic. Calculate total retirement funds needed. Calculating how much money you must accumulate to provide a certain income at retirement. You may use an online retirement calculator or a spreadsheet. Convert the annual retirement income need into a lump sum. Your retirement income also needs to keep pace with inflation. Add any post-mortem obligations you wish to fund.

Alternatively, you could use a spreadsheet. Doing this on your own can be complicated. If you want to use an online calculator, skip this and the step on calculating accumulations. Create columns for the annual expenses addressed in the previous steps: basic living expenses, extras, and travel. Fill in the amounts you calculated. Adjust for inflation. If you haven’t already done so, adjust these amounts for inflation, as directed. This is the amount you will need for a single year.

Repeat this process in an additional row for each year you expect to be retired. You’ll note that the amount will grow every year as a result of inflation. When you’ve reached the bottom, calculate a subtotal for annual expenses. This final amount is your total amount needed for retirement.

If this is all a bit too complicated, there are free Excel templates you can download that are already set up for you. Consider accumulations.

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That’s why it’s a good idea to plan a certain amount of medical expenses into your budget. You have only so much money to work with if you stick to spending within your means. Fo, S. If you’re a regular employee your taxes are likely withheld from each paycheck. Most importantly, the reasons for taking time off maks not have to be distinguished. Cost-of-living calculators can help you adjust your budget estimates based on your location. The adjusted annual salary can be calculated as:. We all get a kick out of seeing how our finances compare to other people in similar circumstances.