I find it interesting to think about these separately.

My rent, food, bills, and other necessities = my cost of living.

Dining out, travel, experiences = my cost of lifestyle.

Ideally, your spending should align with the things you value.

<aside> 💡 *“Spend extravagantly on the things you love, cut mercilessly the things you don’t.”

—Ramit Sethi*

</aside>

This also introduces something called the 4% Rule, a famous study that showed you can basically never run out of money if you withdraw up to 4% of your portfolio each year.

Which means… multiplying your ( annual Cost of Living expenses x 25 ) would give you a large enough portfolio such that you could pay your bills forever without running out of money.

Admittedly, this can be an intimidatingly large number. But start with something small like your cell phone bill.

$35 x 12 mths = $420

$420 x 25 = $10,500

This can also help you come up with an emergency fund amount that feels right to you. Typically 3-6 months of your cost of living expenses.