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How Do I Calculate Average Living Expenses?

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  • Written By: Cindy Quarters
  • Edited By: Shereen Skola
  • Last Modified Date: 21 November 2016
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Average living expense is the typical cost of living, which can include a variety of basic factors. Sometimes when you are contemplating a possible change to your finances it can be helpful to have an idea of what your current expenses are. Figuring an average not only helps you to understand current expenses, but also indicates what they are likely to be for the immediate future. To determine this value, actual living expenses should be determined over a fixed period of time, then divided by the number of months involved to determine the average.

To calculate average living expenses, first make a list of all of your typical monthly bills. Write down all of the major, obvious expenses, such as rent or mortgage, utilities and car payment. Include other necessities such as gasoline, food, insurance and clothing. Include each of your monthly expenditures even if they aren't necessities, such as magazine subscriptions, entertainment costs, and charitable donations.

Group all of your expenses together by month, so that when you add everything together you have the total that you spent on all of your combined expenses. To determine an average cost it is best to have data for at least three months, but you can use more if you wish. The more months you use, the more reliable your average will be.

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Add the monthly total together and divide by the number of months the figure represents. This gives you your average living expenses for one month. For example, if you add up your total living expenses for a period of 12 months, you will have the actual expenses for a full year. Divide that number by 12, the number of months involved, to get your average living expenses for one month.

Living expenses tend to vary widely by region, and you can also determine average living expenses for another area by researching costs. Gather the same type of information you would use to figure your personal average living expenses, but instead of figuring it over time you will average the numbers from several sources for each expense category. Use newspapers from the area in question, often found online or at the library, to research rent costs, food prices and other expenses.

Look for a range of costs, such as three different prices for a two bedroom apartment. Add each type of cost together and divide by the number of sources. For example, to determine the average cost of a two bedroom apartment, find the rental cost for three such units. Look for a high figure, a low figure, and one somewhere in the middle. Add them all together and then divide the total by three to get the average cost of a two bedroom apartment in that area.

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