Why You Should Try to Live on $1,000 a Month

A few years back I was between jobs and a friend asked me the proverbial, “What are you going to do now?” I told her I could do a number of different things, and I could keep my mind fresh by taking on different projects. My main goal was to have free time. I’d rather work less and have have less money, because I’d rather have the free time. “I bet I could live on $1,000 a month,” I explained. “If I find two or three jobs that each pay me $1,000 a month for consulting or part time work, then that would be fine to me.” I didn’t necessarily want to take on just one job and be tied to a 40-50 hour a week position. My friend expressed a bit of disbelief that 1k a month would be enough to live on.

(Kimberly Palmer at Yahoo Finance recently had an interesting article asking, “Could you cut your expenses by $1,000 a month?”. I’d like to go a bit further and live on $1,000 a month.)

It was at this point that I questioned my own numbers. And after going through the numbers month after month, I determined that it really was possible. When I considered how much I was spending, and how much I could cut, I realized that it truly wasn’t that difficult. I grouped my expenses into five main categories.

1) Housing (Rent or mortgage and utilities)
2) Food (groceries or eating out)
3) Transportation (car payment, gas, bike, bus fare, or however you get around)
4) Necessary Incidentals (a winter coat, toothpaste, haircut)
5) Supplementals & Wants (Gym membership, netflix, new cd, gifts)

Obviously so much of this depends on where you are in your life. At the time my car was paid off, I didn’t waste money on eating out too much and I was willing to have a roommate. Overall though, I was amazed at how much we really do waste on unnecessary spending. If we really set out minds to it, $1,000 a month for basic rent, food and extras is absolutely possible.