How Much Is Enough For Retirement Or Emergency Funds? | How I Calculate My Monthly Expenses

Many people like to set a target of 1M dollars as the amount they need for retirement without actually confirming if it is too much or too little. If your expenses add up to $20,000 a month because you are living in a landed property with 2 posh cars, then 1M is probably going to last you only 4 years of retirement living.

On the other hand, if your monthly expenses are only $2,000, then 1M can last you 41 years of retirement living, assuming you do not need expensive medication that is not subsidized.

So how much are you spending every month?

I know it can be quite time-consuming to keep track of every single expense and they sometimes tend to fluctuate over the months.

So, I thought of a simple and fuss-free way to come out with a good estimation of my monthly expenses. I basically add up all my credit card bills and the spending on my NETS card over 6 months and then average them out.

This amount (average monthly expenses) is also good for me to gauge how much should I set aside for my emergency funds.

Credit Card Spending

There are my credit card statements for the past 6 months for my BOC Family Card:

Aug 22: $1,655

July 22: $1,206

June 22: $1601

May 22: $1,202

April 22: $1,632

Mar 22: $1,422

Total Expenses paid with BOC Family Card for the last 6 months = $8,718

I also use the Citibank Cash Back Card when I have hit the minimum spending limit (to qualify for a cash rebate) for my BOC card. The expenses over the last 6 months are as follows:

Aug 22: $878

July 22: $959

June 22: $1,452

May 22: $1,107

April 22: $933

Mar 22: $1420

Total Expenses paid with Citi Cash Back Card for the last 6 months = $6,749

I also incur some expenses on my POSB Everyday Card over the last 6 months:

April 22: $784

Mar 22: $1,334

My total spend through POSB Everyday Card in the last 6 months = $2,118

The total spend through all my 3 credit cards in the last 6 months = $18,455

NETS Card Spending

I rarely use my NETS ATM card for payment unless the merchant does not accept credit card payments. The good thing about paying using a credit card is to earn cash rebates on the spending. Therefore, the deductions off my saving accounts are mainly used for GIRO payments for income tax, insurance, utility bills, and town council S&CC charges.

Aug 22: $1,188

July 22: $887

June 22: $979

May 22: $1,063

April 22: $1,112

Mar 22: $1020

Therefore, the total expenses paid through NETS / Savings Account in the last 6 months = $6,279

Total Spending

Summing up the total expenses through all my credit cards, ATM cards and GIRO deduction, it is a grand total of $25,184, which gives an average spending of $4,197 per month.

Why Is This Figure Important?

This figure is important for the following reasons.

If I need 6 months of emergency savings, I should have at least $25,000.

If I were to lose my job, my next pay would have to be at least $4,197 per month (draw-home pay).

If I were to retire early on passive income/ sideline income, it also must be bigger than $4,197.

Lastly, if I wish to live off my savings for the next 30 years, I must have at least $4,197 x 12 x 30 = $1,510.920.

Of course, my expenses may get lesser as I get older or when I retire, I probably do not need to pay income tax anymore. On the other hand, 4.2k may translate to 5k or 6k in the years to come due to inflation. Therefore, I will use this figure for now to plan how much I really need for my family’s expenses every month.

I hope this sharing has been useful to you and can help you plan your finances and financial goals better, instead of following everyone’s target of 1M. You may need more or you may need less. If you need more, you may need to hustle more, you can check out this post for some ideas:
I Did These 10 Side Hustles While Working Full Time | 10 Side Hustle Ideas To Help You Earn An Extra Income

Or try to save up more, through these 10 tips:
10 Ways To Save Money To Help You Fight Inflation & Rising Costs Of Living

If you need less, then don’t need work so hard and spend more time doing the things you enjoy before this journey is over!

*** FREE RESOURCES ***
Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading

The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread

Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts on executing these trades:
MY TRADES

If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?

Also, check out my trading strategies in different market conditions, whether it is bullish, bearish or volatile:
How Not To Lose Money In Trading? | My Trading Strategies For Bullish, Bearish And Volatile Market

I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day

I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sense of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021

This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months

After accumulating more than 600k of unrealized losses on my portfolio, I wrote this article to encourage friends and investors who are also losing a lot of money to the market.
If You Are Feeling Depressed From Losing Lots Of Money In The Stock Market, Here’s An Article For You

In the 10 years of my investing journey, I have made many mistakes but also learned many lessons from these mistakes. I compiled the 10 most valuable lessons that I have learned and may they help you succeed in your investing journey.
Happy 10 Years Of Investing | 348k (Realised) Profit, 635k (Unrealized) Loss & 10 Lessons Learnt

I did these 10 side hustles while holding a full-time job, so I share them here so you can be inspired to grow your wealth through a side hustle that you enjoy.
I Did These 10 Side Hustles While Working Full Time | 10 Side Hustle Ideas To Help You Earn An Extra Income

Want to learn more about Technical Analysis (TA) but find it difficult to grasp the concepts? This article brings you TA at a glance, and helps you understand key terminologies, indicators, and techniques used in TA to equip you with the knowledge that can empower you in your investing/ trading journey.
The Newbie Guide To Technical Analysis (TA)

Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)

Follow me on your favorite social media platforms, Facebook, LinkedIn, or Twitter, to get notified of my latest blog posts. Or join our investing/ trading community at Telegram to exchange ideas or ask questions relating to investing/ trading.

*** FREE EBOOK ***

Download a free (Volume 1) copy of my motivational book to help you cope with the negative emotions in life and find the happiness that you deserve.