Walkaway Pricing: How Much Do You Spend on Everyday Needs?
Part two: Understanding your personal, household, and living costs
This is part two of my guide to working out the minimum you should charge as a freelancer or content creator. Please see my introductory post for more information and links to others in this series.
Being a self-employed content creator means meeting all of your financial needs from the rates you charge to clients. Those financial needs start with your living expenses. Whether that’s keeping a roof over your head, paying the bills, buying groceries, or looking after your kids, these are your essential costs.
Planning for these costs means you can charge enough to keep you and your family safe and secure. That’s why your living expenses are the foundation of your walkaway price. Set your rates above what you need to meet your basic needs, so you can have some breathing room to grow your content business.
In this guide, we’ll explore what those financial needs are. You can then add up how much you’re spending on each of them. In a later guide, we’ll combine these costs with other areas to determine what you need to charge for your content.
Remember that being able to cover all of your costs is essential to your peace of mind. Get that pricing right, and it’s a great starting point for reducing anxiety and creating awesome content.
Some financial notes before we begin
If you need advice on reducing your essential costs, managing debt, controlling your budget, or other financial help, I recommend the Personal Finance Wiki and subreddit. The wiki provides a ton of helpful, practical advice and if you still need answers, you can post to the subreddit.
Your household costs will vary from month to month, and probably increase from year to year. It’s worth checking your costs regularly, so that you can stay up-to-date with your walkaway price. I recommend recalculating costs and rates every six months or every year.
At this stage, we’re only interested in your essential, everyday living costs. This is all the spending you do to meet the basic, immediate needs of you, your family, and your household. In later guides, we’ll get into other costs including your business, savings, investments, disposable income, hobbies, vacations, etc. In this guide, I’ve included the word (essential) after relevant areas so that you only include those essential costs.
None of the sections below will contain every single cost you have, so see them as starting points. Check your transactions and ensure you’re capturing all of the money you spend on essential costs.
I’ve used US Dollar amounts, assumptions, and examples throughout these guides. That’s because I live in the US, and understand that financial system the best. Don’t let the $USD put you off. These guides should work fine in your own currency, just substitute in as required.
I know there’s a lot here! It does take a while to figure out your expenses, but it will be worth it. You’ll be more confident of your spending, and you’ll be able to set content creation rates to meet all of your needs.
Let’s get into it.
How to figure out your personal costs to calculate your content rates
Here’s how to use this guide:
Go through all of the sections below and figure out your average monthly costs for each.
Look back over your bank and card statements to confirm the amounts. If the amounts vary significantly from month to month, you’ll want to average over a longer period.
Write down the monthly amount you spend on each area.
Once you’ve covered all of these areas, add everything together to get the total amount you spend on basic needs each month.
We’ll use the total amount in future guides to help you calculate your minimum rates.
Example: Your electricity bill in the summer is $140 a month and in the winter is $260 a month, that’s an average of $200 a month.
Why your essential costs matter for your content creation rates
Once we have your essential costs, we’re going to add them to two other areas: the price of doing business and your optional costs. This will help us understand your total spending over a month.
Then, we’ll divide that amount by the number of hours you can bill in a month to figure out where your rates should start. We’ll complete those steps in a future guide, but this one provides a vital starting point.
Mortgage, rental, and similar
Mortgage / rent payment: Payments that you make for the mortgage on your home, rent, or lease costs
Mortgage life insurance: Premiums that you pay towards an endowment or life assurance policy that on maturity will pay your mortgage
Property service charges: Any HOA, service, or management costs that you need to pay for your property
Property taxes and rates: Property taxes and rates for your home
Credit cards and loans
Credit card minimum repayments: Minimum monthly repayments toward your credit card debts
Credit card lump sum repayments: One-off payments to pay off your credit card debts
Personal loan repayments: Repayment amounts to pay off your non-home / vehicle loan debts (home and vehicle loans are covered in other sections)
Hire purchase and lease repayments: Repayments for hire purchase, leases, and other agreements that you have for the provision of goods
Overdraft costs: Regular or one-off charges for your bank overdraft
Student loan repayments: Repayment of any student debts
Insurance
Buildings and contents insurance: Insurance for your home, building, and contents
Life insurance or assurance: Life insurance or assurance policies
Critical illness or income protection insurance: Insurance that covers you if you are very ill, become disabled, or cannot work for other reasons
Other insurance: Other insurance that you need to carry (auto insurance is covered under transport, below)
Other financial costs
Bank account charges: Fees that your bank charges for account services and other charges
Legal advice and personal accountancy: Fees you pay for legal advice or to your accountant for personal accountancy advice and services
Food and groceries
Food shopping: Your regular food shopping for groceries, food, drink, and other staples
Lunches and snacks (essential): Money that you spend on lunch and snacks that isn’t part of your normal food shopping
Household
Household shopping (essential): Costs of shopping for household items including cleaning products, kitchen items, and similar
Appliances: Costs of household appliances like washing machines, refrigerators, etc, including purchase and repair plans
Furniture and furnishings (essential): Cost of furniture and furnishings
House maintenance and repairs: Costs essential to maintaining your home and belongings.
Yard and garden maintenance (essential): Items that you buy to help you maintain your yard, garden, and property exterior
Utility bills
Energy: Electricity, gas, oil, solid fuel, etc.
Water: Water, well, sewage, wastewater, septic tank, etc.
Trash and recycling: Costs to pick up your recycling and garbage / rubbish.
Phone: Cell, mobile, and landline phone rental and call costs
TV (essential): Digital, cable, or satellite TV costs
Internet: Broadband or other costs to get online
Personal care
Clothes and shoes (essential): Money spent on clothes, shoes, and general apparel for you and your family
Personal care (essential): Visits to the hairdresser, stylist, or similar
Medical and healthcare
Medical insurance: Regular premiums for your family’s medical insurance, healthcare plans, or private healthcare
Medical costs: One-off or repeat medical costs that aren’t covered by a healthcare plan or other support
Prescriptions and medicine: Costs for purchasing medicine or medical supplies, either with or without a prescription
Dental care: Medical fees and insurance for caring for your teeth and the dental care of your family
Eye, hearing, and similar costs: Medical fees and insurance for opticians, hearing specialists, glasses, contact lenses, eye tests, and similar costs
Transport
Vehicle purchase, loan, lease, and rental: Payments for the purchase, rental, or leasing of vehicles, including loans
Vehicle insurance: Payments for your vehicle insurance
Vehicle fuel: Gasoline, petrol, or diesel costs
Vehicle breakdown cover: Cover for breakdowns and other car issues
Vehicle maintenance: Regular or one-off mechanical, engineer, and garage costs for repairs and maintenance
Vehicle parking: Parking or garage fees, long and short term
Vehicle tax: Taxes (if any) for owning and running a vehicle (e.g. road tax)
Public transport fares (essential): Tickets for buses, trains, and other public transport
Technology (essential only)
If you capture costs here for your technology, be careful not to capture it again in your business expenses, so you avoid double-counting it. Remember also to only count essential costs.
Phones: Purchase of cell, mobile, and landline phones.
Desktops, laptops, and tablets: Purchase of computers
Computer accessories: Accessories for your computer such as routers, webcams, microphones, USB sticks, etc.
Computer consumables: Printer paper, ink, and other consumables
Software: Purchase of or subscriptions to computer software and apps (e.g. antivirus, utility, other)
Electronics: Electronic gadgets including streaming devices, TV, entertainment, headphones, etc.
Childcare and dependents
Childcare: Nursery, nanny, daycare, babysitting, or other childcare costs
Children’s activities and clubs (essential): Clubs and other activities for your children such as after school, sports clubs, camps, etc.
Children’s travel (essential): Travel costs for your children; buses, trains, etc.
Toys and treats (essential): Toys, gifts, treats, and other products or services for your children
Children’s allowance and pocket money (essential): Regular money given to your children
Support for other dependents: Any money that you pay out to support other relatives or dependents
School, college, and education
School, college, or university fees: One-off or repeat costs for the education of your children (tuition fees, textbooks, etc.)
School meals: Food costs for lunch and snacks at school
School trips (essential): School trips, travel, vacations, and school days out
Support for student children: Money that you pay to support your children while they’re away from home (accommodation fees, travel costs, etc.)
School, college, or university fund: Saving for a fund to send your children to school, college, or university
Adult education and training (essential): Personal classes or courses that you’re taking
Pets
Pet food: Costs of feeding your pet
Pet insurance: Insurance to cover pet veterinary care
Pet toys, accessories, and services (essential): Toys, accessories, or other pet costs
Veterinary care: Vet fees not covered by pet insurance
Special occasions
Birthdays (essential): Costs of gifts, parties, and other expenditures for the birthdays of family and friends
Christmas / holiday season (essential): Costs of gifts, parties, and other expenditures at Christmas or during the holidays
Mother’s, Father’s, Valentine’s Day, and anniversaries (essential): Costs of gifts, parties, and other expenditures for annual “special occasion” days
Entertainment (essential only)
Many entertainment expenses may not be essential. Only record costs here for entertainment that you cannot live without.
Movies and cinema trips: Trips to see films and movies
Theater trips: Trips to see performances at the theater and other live events
Music, gig, and concert trips: Gig, concert, and music tickets to see live bands, festivals, etc.
Film, movie, and music purchase or rental: One-off rental and purchase costs for films, movies, and music
Streaming costs: Ongoing subscriptions for streaming services
Book, newspaper, and magazine costs: One-off and subscription costs for magazines, newspapers, and books.
Consoles: Console hardware and accessories
Games software: Video games, console, and PC entertainment and game software
Leisure (essential only)
Many leisure expenses may not be essential. Only record costs here for leisure that you cannot live without.
Social life: Expenses relating to socializing, meeting with friends, etc.
Alcohol and tobacco: Money that you spend on wine, beer, spirits, cigarettes, etc.
Leisure shopping: Shopping that you and your family do for fun and leisure
Days out and events: Money you spend on events, days out, sports, etc.
Hobbies and pastimes: Costs of your various hobbies, interests, or pastimes
Activities and clubs: Any essential activities and clubs that you belong to that you haven’t already covered
Other essential costs
Once you’ve been through each of the sections above, take another look through your bank and credit card statements. See if there are any other costs on there that you’ve not captured, and add them to the relevant section or a new section. At the moment, you do not need to capture:
Costs related to running your creative business
Costs for optional, discretionary, or luxury spending
We’ll cover those in the next parts of this guide.
Bringing it all together
Now that you have average monthly costs for all of your essentials, write that figure down. We’ll be using this number later in these guides to help you work out your minimum rates.
Thanks for sticking with me through this guide, I know it’s been a long one. And I know it’s a lot of effort. It’s worth it — as we capture further information about your business and other areas, you’ll get a much better understanding of your costs and you’ll be able to charge rates that compensate you properly for your content creation.
That’s it for this guide. Next time, we’ll explore the costs of doing business. See you then!
Please note that I am not a qualified professional and I do not provide tax, legal, accounting, or similar advice. These guides are provided for informational purposes only. Always consult with a qualified professional on your unique circumstances.