How much do you need to live on?

How much each of us needs to live on determines a lot of the choices we make in life. And I would argue that how much we THINK we need to live on determines them even more.

Which brings up an interesting paradox in this economy: the more money you make (and think you need to live on), the more worried you probably are. I’d be terrified if I had a 200K job. Your eggs are all in one basket, so to speak, and you’ve probably come to believe you NEED that much to survive.

While since I’m used to working freelance, I never know how much I’m going to bring in. My husband does this as well, so the effect has been that we always live on LESS than we usually make, in case both of us aren’t bringing in very much. But the irony is that my hodge podge collection of little jobs not only has trained me to live on less, it’s actually a better bet in this market not to just rely on one job.

Of course most people still work for one employer at one job, and for most people that’s convenient and works out the best for them. And that’s great. But I would still argue that even for people who know exactly how much they’re bringing in, it would be smart to think about how much you really NEED to live on. If you live below your means, you’ll not only save more for retirement and things that are important to you, but you’ll be more prepared if you face an unexpected layoff or illness in the family.

The interesting thing is that most people tend to adjust to whatever their income is. So if you make $50,000 and you get a raise to $60,000, you probably won’t have $10,000 minus taxes in savings at the end of the year, you’ll most likely have spent it.

And whether you make $20,000 or $100,000 or $250,000, my guess is that that’s the amount you truly believe you NEED to live on. I live in Los Angeles, and a lot of my friends work in the film industry. It’s very common to make six figure salaries, even for trade/craft type jobs. So most people have come to believe they can’t possibly live on less than $100,000 a year. If you ask them how they think other people live on the average of $42,000, they’ll say it’s not possible in Los Angeles. It’s true that rents and mortgages are more than you would pay in places like the midwest, but we own our home and I certainly don’t believe I HAVE to make at least $100,000 or I’ll never survive.

Here’s an example of what I’m talking about. If you drive a BMW, and it needs a new tire, that might cost you $450. I drive a Camry, and as far as I’m concerned it’s like driving a luxury vehicle, but when I replace the tires all four will cost less than that. So the CHOICE of driving a BMW puts you in the position of needing more money to live on. As do all kinds of other CHOICES about what neighborhood you live in, how big your house needs to be, how often you must eat out, where your children must attend school ($15,000 a year for some preschools, and I’m not exaggerating for effect), and what car you drive.

All of this is pretty obvious. But I think a lot of our choices are unconscious, because a lot of what we do is determined by the culture we live in. And I mean the culture of our friends and neighborhood and the work we do, in addition to the general consumer culture. It’s the soup we swim in. If we earn $250,000, we don’t have the slightest idea how someone lives on $42,000, and we probably feel sorry for the poor schlub, if we think of them at all.

For me, whenever I’ve earned the most money, I’ve been the most unhappy, because I’m working way too hard. I spend too much on everything because I don’t have time to cook or make wise purchasing decisions. When I save more and spend less, I feel more free and more in control. I don’t have to worry if I get less work, because I don’t need as much money in the first place.

I hope you love the work you do. I’m not anti-work. I think work can be an important part of life and something that offers great rewards. But working for the sake of making more money to buy more stuff is a no-win situation that will end up costing you more than you can afford.

A lot of people are waking up to the trap of our consumer culture. If you’ve never seen The Story of Stuff, check it out. It’s a great argument about how STUFF is destroying us- working for stuff, buying stuff, throwing out stuff. It’s destroying our neighborhoods, our communities, our health, and our environment.

So what are YOUR assumptions and expectations about how much money you need to live on? Would you like to be able to live on less? Please share your thoughts in the Comments section.


  1. WilderMiss says

    AMEN Sister! I couldn’t agree more. Lifestyle inflation, keeping up with the Joneses, all that jazz. If you don’t have financial skills you’ll have money problems no matter how much you bring in.

    My personal philosophy is that the most important thing is to keep my fixed expenses low. By doing this I have so much FREEDOM! And I like my freedom more than I like an appartment that’s $300/month fancier.

  2. Marylyn says

    Well, well, well. The amounts discussed seem wacko to me! I make $31K per year (at one job) before taxes and other deductions. And my spouse makes about the same, more or less. He saves a lot, though. Our mortgage is approximately $420 per month for a funky little two-bedroom, one-bath house, and in five years (retirement time?) it will be paid for. (The fact that I dislike the house is just too bad, I guess). Our only splurging is on organic food (we want to support the growers), and used “STUFF” from e-bay. Maybe if we watch “The Story of Stuff” we’ll quit that habit.

  3. Angela says


    The Story of Stuff definitely applies to new stuff, so I don’t see anything wrong with your ebay “habit,” as you call it.

    The amounts ARE wacko- that was the point of the post- that when the average family lives on 42K a year, what does it mean when you think you need so much more than that? Because it’s easy to fall in with that thinking…

    For example, my mom and dad are looking for a retirement home and she says to me they found a “little” house for “only” 350K or something like that, and there’s “no way she could live in it without spending at least 100K to fix it up.” And I thought “Really, wasn’t someone living in it that way before? Who are you, the queen of Sheba?”

    You get used to your social group, and her social group is doctors and their wives (no doctors and husbands in their group).

  4. calimama@compactbydesign says

    As someone who always had a traditional (although creative) salary position, I had a hard time understanding how my “non-traditional” friends could handle the stress of not knowing how much money they would earn in a given period.
    My husband and I took a major hit when I quit my job almost two years ago for the birth of our first child. Now, with an impending second birth, and subsequent non-working years I have really come to realize you’re right. We can live on less than we thought we needed to survive. And we still survive quite nicely!

    Learning what’s a priority and what’s a luxury may be a little ego-bruising but it’s not life threatening!

  5. FOO says

    Hi Angela! Thanks so much for visiting my blog and leaving comments!

    I love the freedom that comes from living *well* within our means, and I think your point can’t be stressed enough.

    Many of my friends, whom I count as family, are Mexican and are so grateful for the abundance that is available to them here in the north (even though they live very simply by “Western” standards). Mostly, though, they count themselves rich in family and community and that is where we really connect.

    I wrote about this a while back but a friend of mine told me that he was in serious debt from living an “upper-middle-class lifestyle” and it was the first time I’d heard a friend describe their socio-economic status. I asked my husband later how he would describe us and he said, “rich”. We have both traveled in countries, like Mexico, where people make do on so much less.

    We work minimally (me 24 hours a week, he 12 hours a week) for pay and love our rich, full, happy lives.

    Thanks for a great post!

  6. Angela says

    Katy- Thanks, oh non-consumer guru.

    Foo- I’ve been enjoying your blog and look forward to some of your delicious veggie recipes.
    Yes, I think of my husband and myself as rich, because compared to most of the people in the world, we are. Like you, I’ve traveled in places where there is so much poverty. I grew up in San Diego so we’ve been going to Mexico since I was a kid.
    Every day I try to remember to be grateful for my health, my friends and family, and for having more than we’ll ever need in terms of food and material possessions.

  7. Kristin @ klingtocash says

    Just hopped over from Frugal Girl. Love your blog.

    I try to live on as little as possible while having a few things I really enjoy. We have older cars, but no car payments. We buy everything on sale and eat at home most nights of the week. It causes our lives to be less stressful and we have more time for each other. It works for us.

  8. Angela says

    Thanks for coming by and for leaving a comment.
    Yes- less stress and more time is a win-win as far as I’m concerned.

  9. says

    I’ve found that people tend to set the expectations (and hence level of spending!) according to their peer group. If all your friends are doctors, you’ll want to buy a BMW, take annual skiing and tropical island vacations, put your kids through private schools, etc. If all your friends are struggling students, you’ll be happy catching the bus and getting together for DVD nights instead of going out.

    So my tip is – choose your friends carefully! Join community groups and organisations that reflect your frugal values (community gardens, permaculture groups, etc), and you’ll tend to meet and associate with people that don’t live a consumerist lifestyle.

    It sounds a little crass, but if all your friends earn less than you, you’ll put a lot more of your money away into savings!

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