As much as you may want it to be otherwise, your life probably revolves around money. Whether you are spending time making money or spending it, money is most certainly involved. Getting stuck in the constant cycle of earning and spending can take a toll on any individual. If you are wanting to work fewer hours or even pursue a job more suited to your personal passions, you may be wondering how much money you really need to make.
The first step towards analyzing your salary comes with the word â€śneed.â€ť For some people, they need to have tropical vacations, friday nights out on the town, and expensive clothing. Alternatively, there are people content with spending weekends camping in the backyard, cooking their own meals, and wearing secondhand clothes. In order to know your salary, you must begin with your needs. Included here are a few tips for assessing your current salary to determine whether you need to make more or less.
Assess Your Needs
If you have ever compiled a monthly budget, you are probably aware that your needs can be stripped down to the bare minimum. For most people, the basic needs are food and shelter. Add-ons like cable television, internet, cell phone plans, cars, life insurance and more are technically wants. While many people may argue that these things are necessary, the true basics come down to food and shelter.
Define Your Wants
When thinking about things you want in your life, you are analyzing your lifestyle. Your list of wants, which for you may seem like needs, are completely different from someone elseâ€™s, and thatâ€™s okay. While there may be a standard of bare minimum survival that could apply to each geographic location, every individual will want to live differently.
For instance, you may believe weekly date nights are a need, while another person defines quarterly airline travel as a need. To understand how much you need to make, you must add these wants into your needs. This should give you a better idea of what kind of lifestyle you can maintain for how much money.
Budget Your Lifestyle
Now that you have a clear understanding of your needs and wants with the costs of each, you can begin to evaluate your required salary. Most experts recommend you live on only about 75% of your salary and save the remaining 25%. If you decide this is unnecessary, you may live on more and eschew saving altogether.
You may need to make two budgets, one for yearly costs and one for monthly. Each month you will face the costs of basic bills, but your yearly cost may take into account homeownerâ€™s insurance, necessary maintenance, property taxes and more. By assessing all of these costs, you can get a feel for how much money you need to make. This gives you the freedom to cut out excessive work hours or just trim the fat to avoid debt.