Learning to be Frugal:How much do you need per year?

[ygolo]

If you're goal is to be financially free, then being frugal is the more sure path that earning lots of money per year.

A formula:
expected net worth = [age X (pre-tax income)/10]

This assumes, no ingeritance. If you have twice that, you are a prodigous accumulator of wealth.

Another way to think about it is:
How much money would you need a year to live your lifestyle (assuming you like that life style)?

How many years of that amount do you have saved?

That is the amount of finacial freedom you have (measured in years).

I know most people are students, so the basic question is:
"how little can you manage to live on for a year?"

For the poll: I should point out, that this is for the lifestyle you want, not your current lifestyle (unless it is the one you want).

 

[ygolo]

I did mine for a family of four living rather comforably.

The indication is that a two-income situation is almost a must (unless I get some great promitions, or something equivalent) by the time I get married, w/ kids.

The other thing is food is a little more than 50% of the expense here. So it seems like frugal families are the ones who can eat the way they like on the cheap.

It seems reasonable to reduce how much my virtual family spends on food by 50% somehow, but I really don't know too many ticks myself.

Any pointers?

 

[disregard]

If $120k/yr is frugal, then there shall be some spoilt children in that family.

 

[Totenkindly]

If $120k/yr is frugal, then there shall be some spoilt children in that family.

If you're fattening the children up for later devouring, I think you should spare no expense! (garbage in, garbage out)

 

[Grayscale]

currently im living comfortably at budgetary needs under $10k/yr... my investments, savings, and endeavors take up the excess.

admittedly, others have remarked that this is out of proportion to my income, but a dollar is a dollar, and everything i dont waste can be put towards something of value, like traveling.

 

[disregard]

I know most people are students, so the basic question is:
"how little can you manage to live on for a year?"

For the poll: I should point out, that this is for the lifestyle you want, not your current lifestyle (unless it is the one you want).

I answered for how much it would take for me to live frugally and out of the red. I'm no expert on income, but I can look at family members to get an idea of what "does it".

I didn't answer for desired lifestyle, as.. I don't really know what it costs to live a desired lifestyle.

 

[ygolo]

currently im living comfortably at budgetary needs under $10k/yr... my investments, savings, and endeavors take up the excess.

admittedly, others have remarked that this is out of proportion to my income, but a dollar is a dollar, and everything i dont waste can be put towards something of value, like traveling.

You're awsome!

I answered for how much it would take for me to live frugally and out of the red. I'm no expert on income, but I can look at family members to get an idea of what "does it".

I didn't answer for desired lifestyle, as.. I don't really know what it costs to live a desired lifestyle.

Agreed, that comment causes confusion.

But the idea is to be honest about what you want while living "frugally." Not making yourself (or family member) miserable in the process.

What I put down is nowhere near frugal.

That's why it is a "learning to be frugal" thread.

I made the luxurious assumption that the whole family eats out every meal...because my cooking is horrible.

The medical, college, and entertainment parts were also liberal. But on par with the way I treat meself now.

So unless I see how I will change when I have kids, I suppose they will be spoiled too.

But food is the most ridiculous part.

Any tips? How much does preparing all your own food save for people?

 

[disregard]

In my house, we spend $100 a week on groceries. At a restaurant with the family... you will spend $100 in one night.

 

[Geoff]

Hmm, I think I live on $25,000 a year, including all housing costs and bills. Lucky for me, I earn more

 

[ygolo]

If $120k/yr is frugal, then there shall be some spoilt children in that family.

Yeah, I am quite spoiled when it comes to food:
http://www.typologycentral.com/forums/bonfire/1692-eating-out.html

But, I was hoping other people would share their own budgetary-discipline problems, too.

 

[Grayscale]

the first hurdle is adverstisary price inflation. this is based on the idea that people will pay more for things even if they arent worth more simply based on being expensive and the glitz of advertising.

the second (and arguably more difficult) hurdle is to know what you're getting for your money and to objectively compare that to what else you can get for the same amount (related or not). the biggest mistake here is paying for features or qualities that you do not need.

1) why, exactly, i am paying for this (distinguish between wants and needs)
2) is this worth the price compared to similar, less advertised counterparts?
3) where is that worth distributed and does that align with what i want?
4) for this amount of money, what else could i get instead, and why is this better?

But food is the most ridiculous part.

Any tips? How much does preparing all your own food save for people?

using the above as reference...

1) you are eating out because you dont know how to cook/dont want to cook/too lazy to learn how to cook. you could potentially end your cost of eating out here by picking up some easy cooking guides to follow (it isnt rocket science!)

also, you do not necessarily need to cook often. here is my typical day of eating: breakfast i have ~2 cups of cereal and juice or water. for lunch, i will eat out about half of the week for work-related things since i dont have to pay, otherwise i will go home and make a sandwhich or two (i live close to work, you could take food with you... anyone can make a sandwhich!). dinner is up in the air, sometimes i eat out, sometimes i compile a lot of smaller things that require little to no preparation. good things here are fruits (canned or whole) and vegetables you can eat raw (celary, carrots, etc), healthy snack food, canned soup or noodles, sandwhiches, or if youre extra lazy, more cereal.

2) where do you eat out? are you paying exorbinant amounts to sit in a fancy building?

3) what are you paying for? (similar to #2) the building, the service, the quality of the food, etc? if you're on a budget, then what you should aim for here is nutritional value against cost. probably going to have a tough time beating someplace like subway in this catagory.

4) is the time and effort saved by eating out worth what you could buy? any decent restaurant is going to easily run you $5-10 more per person than groceries... thats easily over $200/mo. per person if you eat out consistently.

 

[Dark Razor]

I am still an apprentice, so I only make about 8000 euros a year, I can cover living expenses with that, but money is very tight and if anything unforseen happens, like if my refrigarator or any other important appliance broke down, I would have to borrow money. I also learned to cook with what is cheap/on sale at any given time, otherwise I couldn't afford healthy food. When I was still at university I had my washing machine break down at some point and I did the laundry by hand for about half a year, untill my parents donated a new one .

I expect that without a car I would need about 20K euros (32K$) per year to be able to accumulate some savings. Having a car in Germany is very expensive and costs almost as much as renting a second apartment, so I don't think I would waste money on that, especially as it is not generally necessary considering our public transportation system. I might get a motorbike again though, although I remember that riding a motorbike during the winter was kinda tough.