About Living Expenses
Living expenses are the costs that a family or individual faces on a regular basis. These can fall into many categories and often have very different definitions. Understanding and evaluating various living expenses is the first step toward maintaining a healthy financial life. In difficult times, many families also need to find ways to reduce or even eliminate some living expenses to remain within their budget.
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Definition
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Living expenses can be defined in many ways. The Internal Revenue Service has set official guidelines for five categories of living expenses considered to be necessary. These areas are food, apparel and services, housekeeping supplies, personal care services and products, and miscellaneous expenses. This, however, does not take rent or mortgage payments into account. In addition, monthly utilities, cable and water are also large expenses. Transportation is another significant and necessary living expense for most families.
Location
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The cost of living varies greatly by location. There are many factors that need to be taken into consideration to determine the cost in any given area. San Francisco, Washington state and California have the highest minimum wages. However, this can be quickly offset by the increased expenses of living in these areas. Though gas, groceries and homes may be significantly cheaper in some areas of the United States, these places also tend to have lower average incomes. This can provide affordable opportunities for families moving into these less expensive areas, but presents significant difficulties when it comes time to try and move out, to a more expensive location.
Necessary Expenses
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Though everyone defines their living expenses differently, in general, many of the things that Americans take for granted are not absolutely necessary. Visits to the salon and spa and other personal care services can often be reduced or eliminated to cut down on a family's cost of living. Fast food and restaurant visits constitute a large expense that is often the first thing to go in difficult times. Entertainment and hobbies are another enjoyable but ultimately unneeded cost.
College Expenses
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College students frequently need to calculate their living expenses to determine how much money to take out in student loans and whether or not to get a job while in school. Living expenses for college students are unique and differ in many ways from the expenses of the average family. The most notable difference is in the expenses of books and other supplies. Additional fees are also added for labs, gym access and other activities. Internet access is necessary for college students today, though this is often provided free in dorms and other student housing. For students living far from home, laundry expenses can add up as well.
Reducing Expenses
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In difficult times, families often need to look for creative ways to reduce their living expenses. Once these have been reduced to the basics, it can be difficult to find more ways to live frugally. However, there are many ways to cut down on the daily expenses of living with a little time and effort. After cutting fast food out of the budget, food expenses can be further reduced by making items from scratch rather than buying boxed convenience foods. Driving can be limited in favor of walking, biking and carpooling. Used items are more affordable than new. Even adjusting the thermostat a few degrees colder or warmer can free up a little extra money.
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