How do I Calculate Cost of Living Expenses?

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  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 28 August 2019
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Your cost of living is a figure that represents the amount of money required to maintain your lifestyle at a particular standard. To calculate your current cost of living, you may create a category for each of your recurring cost of living expenses. You will typically need a category for everything from rent and mortgage expenses to those you face for food and clothing. You may then review bills and bank statements from the past six months and add up the totals you’ve paid for each category over this time period. You can then add the per-month amounts in these categories to come up with an average total spent each month and add five percent to this total for unexpected fluctuations; this final figure is your cost of living total.

Your cost of living expenses will likely include about 11 different expense categories. You will likely need a category for your rent or mortgage and utilities, one for transportation, and another for insurance. You may also have categories for child care, food, and clothing expenses. As you prepare to make your calculations, you may also create a category for credit card debt and other loans as well as separate categories for entertainment, subscriptions, and money you put into savings. Additionally, you may create a category for miscellaneous expenses.


Once you have created separate categories for cost of living expenses, you may proceed by figuring the average monthly amount you spend on each category. To make these calculations, you may review bills, bank statements, and even expense notes you’ve kept and add the amount you spent in each category to get totals for each of the last six months. Then, you may average each category by taking the total amount you spent in each category in the last six months and dividing it by six. Finally, you may add the averages of each category to come up with a total that represents your average monthly expense. You may have difficulty with calculating the miscellaneous expenses, but adding 15 percent to the average of your other monthly expenses is a good way to handle this.

In calculating your cost of living expenses, it makes sense to account for unexpected fluctuations in the amounts you have to pay. To do this, you may add five percent to your average total of monthly expenses. This total is your cost of living expense.


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