Living Expenses and How to Budget For Them

Living Expenses and How to Budget For Them

All of us dreamt about the perks of adulthood. However, little did anyone warn us about the never-ending expenses that will accompany this golden era of our lives. From rent to groceries, car insurances to utility bills, a wide range of living expenses unleash upon us as we become responsible adults. 

If you are an adult struggling to manage living expenses and how to budget them, you are in the right place. This post will give you a comprehensive insight into living expenses, their categorization, and strategies to manage them efficiently. 

This is really important, especially if you have a lower than average income with ever-increasing living expenses. Without a reliable mechanism to budget your finances, you will consistently find yourself running into debts and financial turmoil. 

Hence, today you will also learn about some of the most effective tips on budgeting to help reduce your monthly costs of living. 

What Are Living Expenses

Your living expenses refer to all necessary expenses that you bear for maintaining a daily lifestyle and good health. Typically, these include costs of housing, clothing, food, transportation, healthcare, etc. The more you understand these expenses, the better you will be able to budget for them. 

Categories of Living Expenses

There are various classifications of your monthly living expenses. This section will give you a brief but on-point explanation of each category of living costs. So without further ado, let us dive right in. 

Housing Expense

Whether you are a homeowner or a tenant, housing is a basic living expense. This may include the following, and some of these may be new to you based on your circumstances. 

  • Homeowners insurance
  • Renters Insurance
  • Utility bills including electric, gas, and trash removal
  • Mortgage payment
  • Rent payment
  • Property tax
  • Property’s repair and maintenance such as lawn mowing, window cleaning, snow removal, etc. 


Apart from your daily means, you must also consider other requirements such as 

  • Food items, condiments, and beverages
  • Cleaning supplies
  • Personal care and grooming items including shampoo, soap, toiletries, band-aids, etc. 


From your bathrobes to pajamas and daily wear to formal work clothes, you must ensure to account for the clothing expenses of all family members. Typically these expenses include 

  • Daily clothing
  • Formal and party wear
  • Boots and shoes
  • Coats 
  • Undergarment & Lingerie


Healthcare is one of the most expensive and the most unforeseen costs that you have to wear at some point. This becomes even more troublesome if you have a chronic illness or condition. Therefore, you must stay prepared for any such emergency costs, including

  • Office co-pays
  • Health insurance premiums
  • Pharmacy co-pays
  • Over-the-counter prescription or items
  • Unforeseen medical bills


Whether you are a car driver or prefer to commute via public transport such as buses and subways, you must account for all transportation-related costs such as

  • Car’s monthly payments (if leased)
  • Car insurance premium 
  • Gas costs 
  • Taxi costs
  • Public transportation tickets 
  • Parking fees

Miscellaneous Living Expenses

Apart from the above-mentioned mainstream living expenses, some costs do not fit any categories and may vary as per each individual. However, they are still a significant part of your monthly budget, such as 

  • Your cell phone bills
  • Your Internet bill
  • Your Cable bill
  • Child or baby necessities 
  • Student loan
  • Any subscriptions such as gym membership, Netflix, or other subscriptions.

 No matter how big or small, you must consider each and every cost that goes out of your bank account. 

How Much Should You Be Spending on Your Living Expenses

There is no set formula for the estimation of how much you should be spending on each month’s living expenses. However, there are some fundamental guidelines you can follow. 

First, your budgeting of living expenses depends upon your monthly salary and living cost in your city. That is why the living expenses will vary for every person reading this post. 

For example, how much rent you pay depends on the location you live at and your personal standards of living. Similarly, figuring out how much you will be spending on your grocery also depends on if you use any store coupons and/or how frequently you dine out. 

If you still wish to come up with a rough estimate of your living expenses, then simply focus on the following main categories. 

  • Clothing
  • Food
  • Housing
  • Healthcare
  • Transportation

Take each component and write down how much do you spend roughly on each expense every month. 

What If You Are on a Lower Income

Most of us have been there, and it can get really hard even to conjure up enough to afford the most basic necessities of life. This is especially true if you are work as an entry-level employee and/or live in a city with a higher cost of living. 

In this case, you will have to think outside the box and come up with creative ways to make both ends meet.  Here are some ways you can budget your living expenses on a lower than average salary. 

For Housing

You can consider splitting the cost by having a flatmate or roommate. Try to be mindful of your electricity and water consumption to reduce your energy bills. Move to a less expensive area or a smaller place. 

For Groceries

While we must eat to survive, you can always scale back on the frivolities such as eating out. Try to plan your meals and opt for food items that can last longer. Avoid trips to coffee shops on your way to work every morning.

Buying in bulk is another effective solution to make the most of every dollar you spend on food items. Instead of buying branded items, try to purchase the store’s personal brand items. For example, instead of buying an expensive shampoo or conditioner, you can buy a store’s branded shampoo and conditioner with similar ingredients. 

For Clothing

Try to look online for cheaper clothes or shop at a consignment store. Plus, you can also build a capsule wardrobe and reduce unnecessary purchases. 

For Healthcare

Always try from a generic brand or over-the-counter insurance. You must check with your employer if they offer a health savings account or a flex spending account. 

For Transportation 

Always do some research and compare several car insurance rates to pick the cheapest suiting your needs. In case you live in the city with access to central public transport then you may consider selling the car. 

If you are a new driver looking to buy a car, a used one would be a more affordable option. Try to get a gas rewards card so you earn something back for every dollar you spend. Try Carpooling to save. 

For Miscellaneous

Downgrading your cell phone’s plan can help you save a considerable amount of its full tenure. Try to search for online codes and coupons to get discounts and avail of promotional offers. 

10 Strategies to Budget

Here are ten very simple but efficient strategies that can help you budget your living expenses. 

Tracking Your Money

Learn to track your incoming and outgoing money. You can even try various budgeting apps or go traditional by using a pen and paper or Microsoft Excel on your computer. 

Always keep your bank statements and receipts to know the exact figures. Categorize your outgoings in fixed and variable expenses. You can even use this budget planning worksheet by the US government to inspire your goals. 

Outlining Your Budget

Sitting down to pen down all your budgets is an efficient means to weed out any unnecessary expenses. Try to figure out how much you might be paying in the upcoming month and use this projection to control your spending habits. 

Planning to Save

Regular savings is a powerful and effective practice to achieve a balance between your financial goals and lifestyle. You can do so by setting a goal to save10, 20, or 30 percent of your income. 

Setting Realistic Financial Goals

Whether you are saving to buy a new car, planning a holiday, or setting money aside for a deposit on that new house you have been eyeing for a while, set realistic goals. If you go for 50 percent saving right off the bat to save overnight, this will cause a sudden disruption to your entire lifestyle. 

This is actually self-defeating as you will give up the idea due to an unrealistic self-imposed financial struggle and strain. Therefore, try to keep it real and do it a little at a time. Start small, get used to it, and then stretch a bit more if you really can. 

It is also good to set a little reward to reaching every milestone. Now do not go overboard but treat yourself with something small for self-motivation. 

Revising the Goals

As time goes on, you will achieve specific goals. This is when you go back to the planning board and set a new target. For example, if you have achieved a target to save up to $10,000 for the emergency funds. You can set a new goal for another purpose, such as saving up for a new car or a holiday. 

Using the 50/20/30 Plan

Are you a person who finds the idea of budgeting overwhelming? In that case, you can try a conventional 50/20/30 plan which means. 

  • Spend 50 percent of your income on necessities
  • Save 20 percent income
  • Use 30 percent on your lifestyle choices. 

Using the Right Tools

The right tools can help prevent your budgeting plans from failing. Therefore, conduct some research and find an app that can link your bank account for automatic analysis. However, if you are goals and needs are simple, an Excel spreadsheet will do as well. 

Staying Focused and Positive

Remember, you are the only person in control of your finances. Therefore, ensure that you stay focused and motivated to follow your plans. Yes, it is ok to celebrate your achievements as a reminder of the more significant reward waiting at the end of each budgeting goal. 

While budget planning will work wonders for you,  life can always throw a curveball at you. All you need is to stay calm, focused, and brace the impact. Do not let a setback or two hinder your overall hard work. 

Additional Tips to Budget Your Living Expenses

While all the above-mentioned strategies define a full-fledge pathway to budgeting your living expenses, here are some tips for tweaking. 

  • Try to limit your needs to reduce the cost of your living expenses. In simple words, create a strict budget plan
  • Take better care of your equipment and other items to avoid repair and replacement costs
  • Trying paying your debts first
  • Avoid eating out, going to clubs and bars, or fine dining
  • Go nuts for leftovers – do not through away the remaining food and create a concoction sandwich or soup with the leftovers from last night. 
  • Focus on personal care to prevent yourself from any accidents, injuries, or health conditions
  • Stop upgrading the phone. 
  • Apart from trimming down your living expenses, try to create a side hustle to earn a little bit extra. You can start a part-time job during your spare time or even download apps to make money.


While living expenses are getting higher with time, the sooner you learn how to budget them, the better the results. Making short-term and long-term budgeting and saving plans can help you achieve the most immediate goals and work towards something bigger at the same time. 

You can use any of the above-mentioned strategies and tips to start your journey. However, there is no set formula. So, it would be best to make adjustments and try different combinations as per your needs and financial situation. 

Happy Budgeting!