The other day I was talking to a friend who is strategizing tackling some student debt. My friend is a gainfully employed professional who makes a good salary. Over the years I get the impression she hasn’t widdled away at her debt as much as she would prefer. It’s not my place to judge her spending but I have noticed she lives fairly well. I asked her a question to try to put spending habits under a different lens. “How would your spending habits change if you were to lose your job and your income was cut off?”
Suddenly there were cuts that could be made. “Well I’d probably stop spending my whole paycheck at expensive organic grocers” she joked. And she’d probably spend a bit less on fancy hipster dining. Anyone that has lost their job and had their income shut off has been put in a place to reprioritize what is a want vs a need. Interestingly enough my friend did not say she would give up her apartment and sleep on the street. She also didn’t say she would give up food. Just expensive food.
So Just What Is Necessary?
Well from a no income perspective, it makes sense to only spend on what you truly need to stay alive right? Rent, food, utilities, (we’re not gonna last too long without electricity and internet these days. Cell phones too.) So what might a jobless budget look like? Well if you lose a job saved up some credit card points prior to it and take a little trip we won’t judge too much.
The Reasonable Jobless Budget
|Evil Health Insurance||$300.00|
This is only an approximate budget but it would probably apply to many people’s livings if you consider living expenses, not including debt payments. The idea is that a living expense somewhere under $2,000 a month is doable if you give up some luxuries.
If you’re more determined you could even get it closer to $1,000 a month.
The Extra Lean Budget
|Get a Roommate or Roomshare||$500.00|
|Still Evil Health Insurance||$300.00|
|Beans & Rice||$150.00|
|Keep the lights off||$40.00|
|Budget Prepaid Cell||$35.00|
|Go to the library||$0.00|
These numbers are only rough estimates and of course, everyone’s situation is different but they can serve as a useful starting point. There’s no gas budget in here because if you’re not working you probably shouldn’t be driving too much. You’ve got time to walk right?
This isn’t THAT bad
While this type of life might not be the most luxurious and exciting, you’re still eating and have a roof over your head. So the question arises, could savers and investors looking to gain financial independence live a life like this for some time in order to get ahead? If you’ve got debt looming over your head and your stuck paying interest on loans it’s in your best interest (no pun intended) to get out of these shackles and take charge of your life. If you’ve lost your job, in a sense you’ve been given the gift of focus and perspective to see what really matters. Six dollar coffees and ten dollar burritos are a want and not a need.
My point is that we ought to live a bit more like our income isn’t a guaranteed thing because it’s not. That’s a lesson well learned by anyone who’s been out of work for a period of time. It’s a lesson with roots in a good understanding of wants versus needs.
So consider spending a month or two living as though you’ve lost your income. It may bring things into focus. It may make you feel empowered to realize you need less than you thought. And you never know..it may prepare you for if you really do lose your income.
Trying to budget and track your wealth? Consider using the free tool Empower (formerly Personal Capital). Sign up with my affiliate link to get a free $20 Amazon gift certificate and I’ll get one as well.
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