Have you ever thought about how much money you need to make each day to survive? I have an annual amount in my head that I feel would allow me to live comfortably and meet all of my financial goals, however it can be overwhelming to think about all those expenses and responsibilities.
Boiling down that number to an amount that you need to just survive and take care of your family each day can seem a lot less intimidating. Over the past few months, a lot of people have lost work and had to go back to the basics with necessities and prioritizing what’s truly important.
Knowing your numbers is crucial. It helps you know what you’ll need to live but also what extra income can do to improve your financial situation. Here are some easy steps you can take to get started.
Calculate Past Spending Over Time
Start by adding up and organizing how much money you’ve spent over the past six months or even a full year. It’s similar to tracking your expenses (like you’d do with budgeting) and it lets you know exactly where your money is going. expenses from other kinds.
You may be surprised at some of the things you spent money on in the past year along with some of your expenses categories but don’t worry about this year. Just add everything up from your bank statements and or pay stubs from work.
Break Down Your Spending Into 3 Categories
Your three categories will be:
Necessary Expenses: These are your basic living expenses only, such as rent/mortgage payment, critical utilizes, insurance, food, debt payments, car repairs and the like. What you’re trying to do here is to identify your survival expenses – but more on that in a minute.
Important, but not necessary expenses: This can include what we might think of as being second-tier expenses, such as gym memberships, cable TV, cell phone plans, household services (cleaning, landscaping, etc), and any other expenses that may be desirable but not critical to your survival.
Luxury expenses: This is basically your fun money expenses. It includes entertainment, going out for dinner, buying clothing beyond the minimum, vacations, hobbies, and memberships, such as at a golf club.
Pay attention to the ‘necessary expenses’ category because these are your survival expenses that will enable you to live – but not necessarily to live well.
Also consider this as your break-even number that you have to earn each month in order to pay the bills. If you’re thinking about turning your side hustle into a full-time gig or working from home, you’ll need to at least hit your break-even point but it’s always best to earn more than this amount.
If you can earn anything beyond – to cover other expenses, or new financial goals – you’ll be thriving.
Break Your Survival Number Down Into a Daily Number
Next, break your survival number down to a daily number – which you can do simply by dividing your annual totals by 12 months then dividing the monthly amount by 30 days.
This will help you to know how much money you’ll have to earn each day in order to survive. For example, if your survival expenses total $3,000 per month, you will know that you’ll have to earn at least $100 each day in order to survive.
Why is that number so important?
First, it gives you a built-in daily target to reach for. But second, and more important, it can make earning income much more doable.
For example, if you are beginning a new business venture, the idea of earning the $3,000 per month that you need to live may seem to be beyond your capabilities right now. But $100 per day may seem to be a very doable, particularly if you have a proven routine as to how you can make that much money each day.
Or, if you’re applying for a new job and you are considering an offer but it doesn’t pay enough to meet your minimum daily income amount, you’ll know to either ask for more compensation or pass.
9 Ways to Earn Extra Money
If you’re looking for an easier way to meet your daily income number or exceed it so you can focus on additional financial goals, here are 10 of the best ways to earn extra money right now. Each link will show you exactly how to get started.
- Sell a product
- Get paid to type
- Become a freelance writer
- Become a virtual assistant
- Start a blog
- Work for a blogger
- Running errands and delivering food
- Test Websites
Have you determined what your daily income number is yet? Are you interested in earning extra money to meet more financial goals and if so what are your top options?