“What does that even mean?” you might be wondering. Well, by “survival-mode number” I am referring to how much you need in order to survive. And really, what’s the least amount of money you can survive off if things were really tight.
Imagine if you lost your source of income, perhaps you are retrenched or you lose your job for whatever reason. Maybe your business closes down or possibly even something worse. Now, if you were in dire straits, how much would you really need in order to survive? You would obviously need a roof over your head and food to eat, but what are the essentials that you need and can you work out a monthly cost for it all?
Why this is interesting
The reason why it’s interesting to know what the bare minimal expenses are that you can survive off is that any expenses above that are “luxuries”. Now it may not seem like a luxury, but if you feel that you can live without it, then it probably is a luxury.
Knowing what you can survive off may give you a new perspective on some of the items you feel you currently need.
Calculating your survival-mode number
It’s quite easy to calculate your survival-mode number. Firstly, imagine the worst financial situation you could be in. Imagine that you are in absolute dire straits. What options would you have available (remember, this is worst case scenario).
- Would you be able to move in with any family members?
- Do you have a caravan that you could live in?
- Could you rent a really small apartment and make it work?
- What kind of budget would you need for food?
- Do you have one or more cars? Do you need them?
- Do you have debt? What are the minimal payments you need to make?
- Do you need your TV and cable subscriptions?
- Would you be hosting dinner parties?
- Do you need a fancy mobile phone?
- What monthly payments are coming off your bank account? Would you need all those contracts?
Write down the things that you really really need and put down a monthly cost to each.
- Family responsibilities (eg School Fees, Uniforms, etc)
- Other essential items
Think about being in survival mode. Just getting by and just making things work. No-one obviously wants to live like that, but for this exercise we’re thinking of the worst. Also discuss this with your partner (if you have one) as this should be a joint exercise.
Calculate your number and write it down.
Does the excess align with your goals & dreams?
Now that you know what your essential expenses are you can look at your current normal expenses. Remember that there is nothing wrong with keeping your lifestyle and expenses exactly as they currently are, but look at your current expenses and question why it is you need all that you have and all that you spend money on.
This is a good time to think about your dreams and goals. If for example you would love to travel more, are all the expenses that are above your “bare minimum” keeping you away from your dream? Is the value you get from eating take-aways worth the fact that you cannot travel more?
Think about the value you get from your TV channels subscription. On one hand it provides entertainment, perhaps it is relaxing and possibly it brings the family together at times. That’s all great, but if you are forever wishing that you could afford to buy your own home then perhaps the luxuries are not aligning with your goals. You may think that such a small amount of money won’t do anything towards your dreams, but it’s a mindset change that counts and the fact that every small bit adds up!
Do you have a budget? If not you can see how easy it is to do it; Create a Budget in 5 Simple Steps.
A budget isn’t meant to restrict you, rather it’s to highlight priorities and remind you of what all is on your plate…
— Brendan (@your_money_blog) January 6, 2018
Why not challenge yourself to a 7 day bare minimum expenses survival test? Just see how you can survive on the bare essentials for 1 week. Cut out all luxuries; take-aways, quick coffees, drinks with friends, work-time lunches, etc! Have a look at my 11 Day Savings Binge to see how it went for me.