Greg at Club Thrifty asserted that you can live on half of your income no matter what — whether you make $30,000 or $100,000. Though he admits that it’s certainly easier on the latter.
Is that true?
Well, let’s see:
At $30,000 a month, your pre-tax monthly check would be $2,500. We’ll assume that you get HR to take out exactly the right amount of tax and not a penny more. After FICA and federal taxes, your monthly check will be $2101 (rounded).
So that means you have to live on $1050.
You’ll need to share an apartment or house. Otherwise, you’ll spend around 60-70% of that amount on a one-bedroom. Maybe 50-60% if you get a studio.
If you live in a major city (but not NYC or other cities with insane rent) you might be able to find a room for $400. $650 remaining.
If you have to cover part of the utilities, assume another $75 a month. $575
Hulu: $9 a month. $566
Internet connection: If you split it, probably $30 a month. (You can get slower speeds, but if you want Hulu, your non-discount rate will be around $60): $536
A Ting or Republic Wireless plan means $15-30 plus tax. So let’s call it $20. $516
If you use coupons and don’t eat much junk/prepared/organic food, maybe $80 for groceries? $436
If you drive a car that’s a few years old (say 7-10), maybe $50 a month for car insurance? $386
Gas: I don’t have a commute, so I can’t really estimate. Let’s assume a short commute, decent gas mileage (remember, you’re driving an older car) and relatively few errands on the weekends. So maybe $75 a month? (A monthly bus pass is $65-120 depending on the region.) $311
Health insurance: Hoo boy, I have no idea. Call it $200? $111
One meal out a month: $25 after tip. $86
Haircut: Unless you’re a woman with a basic haircut, you need a trim about once a month. If you go to a beauty school, call it $25 after tip. $61
Retirement: I assume this counts as savings, so it wouldn’t be in this portion of the budget.
That’d leave you at $1111 at the end of the month, or 44.4% of your $30,000 salary. So yes, I suppose — in a perfect world where you’re not a homeowner and don’t have a long commute, newer car, student loans, prescriptions or a general desire to live by yourself — you could save (almost) half your income. Except in months where you need new shoes, car repair, health problems or other incidentals.
If you earn $10 an hour, you’re looking at a (rounded) post-tax amount of $1641. That means you have $820 to live on. After the expenses I listed above, you’re at -$175. Meaning you’d have $645 left at the end of the month. That’s 37.2% of the $20,800 you earn each year.
Again, in a perfect world. If you’re a homeowner, repair bills call the whole thing off.
What about you guys? What percentage of your income do you save? Do my numbers sound right?