How to Calculate Your Annual Living Expenses

Your household's annual living expenses depend on your standard of living and the specific bills that make up your situation. Knowing your living expenses can help you determine how much annual net income you need to support your lifestyle. Although you can track your expenses for one month and multiply it by 12 for a rough estimate, you will get more accurate results by considering fixed-monthly expenses and more sporadic annual expenses separately.

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Calculate Monthly Expenses

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Step 1

Add up all of your fixed-monthly housing expenses. This includes your rent or mortgage payments, electricity, water, gas, phone and cable. Some of these might fluctuate slightly from one month to another, but use estimates of the average cost.

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Step 2

Add your monthly transportation costs. In most cases, this will be your car payment and insurance, and average gas expenditure. If you pay your car insurance premiums less frequently, save them for the annual expenses section.

Step 3

Add your health costs. This includes gym memberships, health insurance, doctor co-pays and the cost of any medications you take.

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Step 4

Add estimates of how much you spend on food each month. Food costs include groceries, meals at restaurants and other food and beverages purchased outside the home.

Step 5

Add your monthly spending money. Purchasing clothing, electronics, books and housewares falls into this category. Personal care items should be included here if they are not in your grocery category. Also include estimates of how much you will spend on entertainment each month.

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Step 6

Add any additional monthly expenses. If you have other debt, such as student loans or credit card debt, include the monthly payments on these. If you are saving for retirement, an emergency fund or another big purchase, add the amount that you save toward these each month. Other potential monthly expenses include child care costs, child support, alimony and monthly charitable giving.

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Calculate Annual Expenses

Step 1

Multiply your total estimated expenses for each month by 12 to find your baseline annual expenses.

Step 2

Make a list of all of the things that you pay for less frequently than monthly. This might include car registration, vacations, gifts, magazine subscriptions, car maintenance and repairs, property taxes and any type of insurance you do not pay monthly.

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Step 3

Estimate how much you spend each year in each of the categories. For example, you might spend $120 per year for oil changes on each of your vehicles. Include each estimate on the list.

Step 4

Add all of the annual expenses to your baseline annual expenses to get your estimated annual living expenses.

Things You'll Need

  • Calculator

  • Recent household bills

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