What Is The Real Cost of Being You?
I’m not just talking about the big, steady monthly bills like rent and your car payment. I’m talking about everything: the random meals out, the 6-month car insurance premium, car repairs and maintenance, and the cost of Christmas and vacations.
For most of us, we don’t know what it costs to be us, and figuring out our true monthly cost is a headache. It involves some guesswork, and often forgetting all those expenses that only hit once or twice a year, and infrequent expenses consume 20–25% of our income. These infrequent expenses are not an “if” but rather a “when.” They will come up, and you may or may not know when you can expect them.
Then there are things you can’t anticipate. That storm can cause a tree to fall, or the winter freeze that causes a pipe to burst. These occurrences are already stressful; let’s take the pain away by having money available when we need it.
Well, good news: you can finally stop guessing.
The Infrequent Expense Trap: The Missing 20-25% of Your Income
According to financial planners I’ve talked to, most people underestimate their spending by 30-50%. They have a pretty good handle on their monthly costs, but it’s the infrequent costs that they can’t give you a total for.
These non-monthly costs, like car maintenance, annual insurance premiums, property taxes, holiday gifts, vacations, and several other expenses, are often the reason spending plans fail. They can easily account for one-quarter of your entire spending over a year. It’s not uncommon for people to spend 90% of their take-home income and be strapped when expenses come in which will happen every year and are not planned for.
Truly understanding what it takes to support your current lifestyle is the game-changer. When you track and annualize your monthly and infrequent expenses, you can come up with a total of what it costs to be you. You stop operating in the dark and take control of your cash flow.
Know Your “Cost to Be You” and Gaining Peace of Mind
Knowing your “Cost to Be You” isn’t just about crunching numbers; it’s about getting clarity on where your money is going by deciding what you want it to do before you spend it. Once you fund all of your expenses averaged annually, you can see how much you have left for other things you want to spend money on. Everything is spending, whether you’re spending it to put in your retirement account or on your vacation. In this example, you are putting money into your retirement account to spend later is still about spending. So the key is to decide what you want your money to do for you to create the life you want.
Understanding what it costs to be you gives you the information to help you determine answers to questions such as:
- Do I have enough to pay my bills this month and save for my other goals?
- Can I afford to keep my lifestyle with the rising cost of living?
- If I choose to change careers, do I know what it costs to live?
How to Calculate Your Complete Cost (and the YNAB Solution)
To find your true “Cost to Be You,” you must assign the monthly amount to the infrequent expenses to prepare for what is coming. With tools like the YNAB (You Need a Budget) app, you don’t have to do the math yourself. The “Cost to Be Me” feature on the mobile app does the heavy lifting:
- YNAB calculates the total amount of money needed to fully fund all of your spending plan targets for the month—including the monthly amounts you set aside for infrequent expenses (like car registration or new tires).
- Then you enter your expected income and compare it to this single, easy-to-read figure at the top of your plan view, which is the grand tally of everything: bills, groceries, and the 20-25% you’re saving for your future, non-monthly costs.
- By instantly seeing your total financial need, you can quickly assess if your expected income is truly sufficient to cover your entire spending plan.
This isn’t about guilt or restriction. It’s about empowerment. It’s about reducing that financial anxiety we have by ensuring that when your car needs $1,400 of necessary maintenance. The money is already there, ready and waiting.
Take a deep breath. Start tracking your spending. Face that real “Cost to Be You” with honesty. Because once you have that solid foundation—the complete picture that includes all those infrequent expenses—you get to build the life you want, on your own terms.
Schedule a conversation with me at MeetWithDoug.com.