≡ Menu

How Much Does It Cost To Live A Modest Lifestyle?


It took a lot of lucky breaks for me to retire from my engineering career before 40. I was able to find a well paying job right out of school and started investing right away. I had some trouble with investing at first, but I settled on a long term strategy and was able to steadily increase our net worth over the last 20 years. I also have a great partner in Mrs. RB40. She values financial security and shares most of my goals. We wouldn’t be where we are if we hadn’t worked together.

I’m very grateful for my good fortunes, but one thing that was always under our control was our lifestyle. We continue to live modestly and have never accumulated any consumer debt. Our income rose steadily throughout our 20s and 30s, but we always lived below our means. We had years when we were very frugal and some where we loosened up a bit.

But what exactly does it mean to live a modest lifestyle? It’s in the eye of the beholder. My definition of a modest lifestyle might look like living in poverty to some people. I’m sure others would view our lifestyle as luxurious. The important point is to live below your means so you have money left over to invest. Anyway, I thought I’d share our modest lifestyle with you. I’d love to hear what you think.

To start off, let’s take a look at the nifty Family Budget Calculator from the Economic Policy Institute. It measures the income a family needs in order to attain a modest yet adequate standard of living. It will be a useful comparison point for us since location can make a huge difference in the cost of living.

How much does it cost to live a modest lifestyle?

RB40 Household Modest Lifestyle

Housing – $2,300

We live in a 2 bedroom, 2 bath condo. It’s around 970 square feet and it’s just about the perfect size for the two of us. Oh wait, we have a kid now… We are a little squeezed at the moment, but we’re managing it. I’m sure we’ll need a little more space when RB40Jr is a bit older. Right now he doesn’t mind timesharing his room as our office. My mom visits frequently so that puts a little more strain on the housing situation as well. Whenever I think our space is too small, I’d remember that my family of 5 lived in a 2 bedroom apartment (or smaller) when I was a kid. Also, one of our neighbors has 3 kids, a dog, and a grandma living in a similar sized unit. That’s really tight.

We spend about $2,300 per month on our housing. That includes mortgage, property tax, insurance, HOA, and utilities. This is pretty expensive, but we love living here. It is centrally located and we save a lot of money on transportation and entertainment. Besides, we have a million dollar view right outside our window. Eventually, we’ll move into our rental home and our housing cost should decrease a little bit. It’ll be hard to give up this place, though.

modest lifestyle

I think the EPI’s $922 estimate is way off. You can’t rent a 2 bedroom apartment for under $1,000 in Portland. You’d have to go out to Gresham or maybe Beaverton. It’s already pretty tough to find a 1 bedroom apartment under $1,000 in inner Portland. The cost of living here is rising very quickly.

Food – $500

We usually spend about $500 per month on food. We mostly cook at home and go out once a week at the most. We shop at WinCo and Safeway, and rarely patronize expensive stores like Whole Foods. When we go out, we usually go to family friendly ethnic restaurants. RB40Jr’s table manners are terrible and we can’t bring him to fancy restaurants. We rarely eat fast food unless we’re on the road.  I think we’re doing pretty well in this category because both of us know how to cook. One of us can always pick up the slack if the other doesn’t feel like cooking.

Childcare – $500

We spend about $500 on RB40Jr every month. Childcare is expensive in Portland for some reason. Next year he’ll start kindergarten so our childcare cost should drop significantly. We’ll probably enroll him in some lessons, but it should be much cheaper than paying for preschool.

I think full time daycare would cost over $1,000. If I was working fulltime, that would be our best option. Luckily, I don’t have a traditional job anymore so he can spend the afternoon with me.

Transportation – $60

This is a great category for us. We share one car that we paid for in cash 5 years ago. We don’t drive much and fill up only once or twice a month. Portland’s traffic has been getting worse and it won’t get better anytime soon. I loathe traffic jams so I avoid driving during rush hour. That’s one reason why we love living downtown. We have great public transportation options and we can walk everywhere. Mrs. RB40’s employer provides her with an annual public transportation pass and that’s perfect for her since she can avoid driving to work.

Healthcare – $100

We’re pretty lucky because we’re all on Mrs. RB40’s employer sponsored health insurance. Once she retires, we’ll have to go with Obamacare. This is a good category for us right now and we only spend about $100/month here.

Other necessities – $800

“Other necessities include apparel, entertainment, personal care expenses, household supplies (including furnishings and equipment, household operations, housekeeping supplies, and telephone services), reading materials, school supplies, and other miscellaneous items of necessity as reported for the second quintile from the Bureau of Labor Statistics Consumer Expenditure Survey.”  I think we’re okay in this category as well. Our biggest miscellaneous expense is travel. Now that RB40Jr can travel, we’ll try to take an international trip once a year. It will broaden his horizon and remind us how lucky we are.

We don’t spend much on clothes. I’m still trying to wear out all my old clothes. We have to spend more on RB40Jr’s because he is very hard on his clothes. Also, nothing lasts more than a year because he’s growing so quickly. Mrs. RB40 spends more on clothing, but that’s mostly so she could be presentable at work. We average about $800 per month in this category.

Taxes – $??

This one is highly dependent on your income. I’m not sure why they include it here.

Overall – $4,300

Overall, we spend about $4,300 per month on our modest lifestyle. That’s right around EPI’s estimate, not including taxes. It’s pretty interesting because we spend more on some items, but less on others. It’s easy to see that our biggest problem is housing. Even if we move into the rental, the housing expense won’t decrease that much. We’ll probably have to move out of Portland to see a big decrease.

Modest Lifestyle

It’s hard to define a modest lifestyle. This lifestyle feels very comfortable to us. I don’t feel like we’re depriving ourselves of anything. Our lives are pretty comfortable. Sure, we could spend more money on luxury, but it doesn’t seem worth it to me. Let’s put some of what we do in bullet points.

  • We rarely buy new things. Our condo is pretty small so we don’t have a lot of storage. Replacement is the current policy. Junior is slowly taking over the whole condo, though.
  • Avoid luxury goods. Luxury goods just don’t excite me. I value financial security much more than luxury.
  • Forget about comparing ourselves with our neighbors.
  • Use things until they break/worn out.
  • Go with free/cheap entertainment. There are a ton of fun things to do that don’t cost a lot of money.
  • Pick affordable hobbies. I’ll never buy a sailboat…
  • Avoid collections. Books, music, and movies can all be borrowed from the library. I rarely buy knick knack anymore. They just collect dust.

As you can see, our modest lifestyle is comfortable for us. We’ve managed to use what we have without feeling like we need to accumulate more things. We splurge on international travel once a year, but I think that’s well worth it.

Do you live a modest lifestyle? How do you compare to the EPI’s estimate?

The following two tabs change content below.
Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

Latest posts by retirebyforty (see all)

Get update via email:
Sign up to receive new articles via email
We hate spam just as much as you
{ 33 comments… add one }
  • John March 16, 2017, 11:01 pm

    Travelling around the world annual costs =$16000NZD, bus train flight, food, accom, some key sights and tourist stuff off the beaten path.
    Living costs at home $25000NZD, with a no mortgage house and I consider myself frugal with basic needs.
    I’m single and life changing circumstances have put me in this path, i backpack, homestay, hostel, check into decent hotels every now and again but just an eye opener on a travelling lifestyle I was astonished how much cheaper expenses are. Though if I had a family I’d do what you guys do. I guess what I do isn’t for everyone unless you got a bit of an adventurous spirit open mind and are OK with living comfortably in really cheap countries

    • retirebyforty March 17, 2017, 9:29 am

      I probably could go with $16,000 NZD if I was single. Now, I have a family and it’ll probably cost at least double that. My wife doesn’t want to rough it anymore…
      Enjoy your travel while you can. 🙂

  • Smart Money MD December 9, 2015, 3:55 pm

    Wow. Child care is not cheap in Portland! I suppose too it really depends on where you are sending your child during the day and what activities the daycare facility offers.

    I’ve seen dog walkers in Manhattan also command rates of $500/month too!!!

  • Sandy December 2, 2015, 11:59 am

    My husband and I live in Seattle and the $913 housing cost only fits because we actually paid off our house last year, otherwise it is pretty crazy! We pay $350 per month in property taxes, $75 for home owners insurance and about $400 for core utilities (water, sewer, garbage, electricity & heating), no cell phones or internet access considered. This comes to about $825 without any mortgage. BTW, I don’t care what anyone says, I highly recommend mortgage payoff! We recently went somewhat unexpectedly from 2 incomes to one and our complete lack of debt (no car payments or credit cards either), has made this reduction significantly less painful, except for the negative impact to our saving rate. I’m expecting that my husband will be working again, but I am seeing this as an opportunity to try out our early retirement budget, which at about 40% of our previous income is working pretty well, despite what financial advisors might suggest (i.e. “needing” 70-80% of preretirement income).

    • retirebyforty December 2, 2015, 11:26 pm

      Thanks for sharing. $913 for housing must be way out in the burb. Seattle is very expensive now. It’s great that you paid off your mortgage. Congratulation! You should try out early retirement. If you’re like me, you’ll never want to go back.

      • Sandy December 3, 2015, 7:54 am

        You would think in the burbs, but I plugged our zip code, which is in the City of Seattle, into the calculator and $913 was what was returned for housing. I wondered if perhaps that doesn’t include property taxes, but then the tax figure seems ridiculous. Thanks! I am so glad we paid off our mortgage, it gives me great peace of mind, that additional stock market investments just wouldn’t deliver. We’ll probably sell our house within a few years and move some place warmer, drier and cheaper, pocketing some of the additional equity. This is when we will early retire, not by 40, but in our late 50s. I’ll also have a small DB pension at this point, that’s the plan anyways.

  • Vawt December 1, 2015, 1:17 pm

    I came out with $989 in health care costs in that calculator! We spend about $200 and that includes our insurance premiums and $100 pre-tax into and FSA.

    I also came in way off on housing, but I suppose the rent vs buy would have a big impact there.

    The guilty part is I know we spend more than the $782 a month in food costs. When we eat out less and I take my lunch to work we get there, but we leave ourselves some extra to not have to stick to it 100%.

  • DivGuy December 1, 2015, 11:15 am

    Expect your food bills to go up and up when your Jr. will eat like an adult! haha! My two oldests are eating more than my wife and I already and they’re 10 and 8! They hopefully have healthy habits, but fruits and vegetables are note that cheap, especially during winter! Anyways, my wife started a new groceries shopping system and it works real fine! We are saving around $50 per week compared to what we used to do before.

    We’ll surely have a more modest lifestyle next year in the RV. Only by skipping a winter, we will save a couple hundreds! 😉



    • retirebyforty December 1, 2015, 11:51 am

      I’ll believe it when I see it. He eats very little now. 🙂 You’re right about fruits and vegetables. It’s tough to eat healthy in the winter.
      Looking forward to your RV trip.
      Best wishes

  • Jim @ Route To Retire December 1, 2015, 10:59 am

    I love when I get to see breakdowns of people like yourself who are actually making this happen… it makes it a little more real for the readers.

    I also like that calculator – I haven’t seen that before. Looks like our budget comes up at about $7k less than yours (Ohio). My wife, daughter, and I live a pretty modest lifestyle as well. I’m going to do the breakdown to see how we compare to the EPI results.

    At a glance, I’m going to guess we’re slightly above the annual total, but that’s because we do have a larger mortgage. The good news is that we’ll have our mortgage paid off in a little less than 10 years and then we’ll be at the target number for me to be able to have that fun conversation with my boss!!

    — Jim

    • retirebyforty December 1, 2015, 11:49 am

      The calculator is pretty neat, but I don’t know if it’s that accurate. I guess they can’t because they have to make quite a few assumptions. Your budget sounds very reasonable. Good luck on your journey!

  • jim November 30, 2015, 3:22 pm

    My family does not live a modest lifestyle. Thats OK with me as long as our savings is doing well and it is.

    It may be hard to find apartments under $1000 in Portland but there are some. Plus the calculator is looking at the metro area including HIllsboro & Vancouver so thats much broader area than just Portland. There are about 400 rentals for under $1000 and about 3700 over $1000. So about 10% of the market is under $1000 in the area.

    I think the $608 figure for transportation is high. A family really does not need to spend that much. Seems to presume every family NEEDs two cars.

    • retirebyforty November 30, 2015, 11:05 pm

      I think that’s okay too as long as you’re increasing your wealth.
      I can’t find any 2 bedroom apartment in Portland. I see some 1 bedroom under $1,000. Hillsboro, Gresham, and Vancouver are definitely much more affordable than Portland.

      • jim December 1, 2015, 11:01 am

        I just searched on Craigslist and there are some 2 beds for under $1000. They are not close in. They might not be in good neighborhoods or have other problems. It is the bottom 10% of the market after all.

        • retirebyforty December 1, 2015, 11:51 am

          Okay, I have to check the city line. I found some around 130th. I thought that was Gresham, though. I probably didn’t do the search quite right. If it was me, I’d rather live a bit further out rather than take the bottom 10%. My super lives in Woodburn and pays around $1,000 for a mid range 2 bdrm.

  • Michelle November 30, 2015, 11:55 am

    We are living somewhat modest compared to those in our area. I compared it to the old area we lived in as well. Once we live in the RV full-time and get rid of our home, we will be even lower!

    • retirebyforty November 30, 2015, 11:03 pm

      Enjoy your RV lifestyle. It sounds great!

  • cato November 30, 2015, 11:20 am

    I live in a very expensive part of California. Forgetting about savings/retirement investing/income taxes and all that stuff, my operating budget requires a minimum of $5,168 per month. Seems high, and it is…but the is the lifestyle I choose. Fortunately my income can easily accommodate.

    • retirebyforty November 30, 2015, 10:59 pm

      Is that for a single person or a couple? I’m guessing… you’re in the Bay Area.

  • Stockbeard November 30, 2015, 11:20 am

    Hey Joe, similar situation as you, here in Seattle. We’re way above their estimates in terms of housing costs, and we’re slightly lower for all other costs. I don’t know how they calculate housing costs, but I agree with you: living in a prime location has a cost, but it is offset by the transportation cost reduction!

    • retirebyforty November 30, 2015, 10:58 pm

      They look at a pretty big area so the outer burbs must bring the average down.

  • Thuy November 30, 2015, 10:23 am

    According to FBC, we are living a modest lifestyle. Our budget should be $5279/month and we are around that including the $1450/month that goes into savings and 529 plan. Our housing in the Seattle metro is a lot more then they are estimating though. Luckily, childcare is zero since I am now home full time. Our transportation and healthcare are much less too. We could spend less on groceries but if we did, I think we’d eat out more. And I like cooking.

    Keeping a handle on lifestyle inflation makes a big difference. I didn’t realize how much we were wasting when we were DINK’s and before we found the FI/RE community. It is amazing how much we are saving even with a toddler and one less salary by paying attention.

    • retirebyforty November 30, 2015, 11:20 am

      Including $1,450/month toward saving is great. It’s really nice that you don’t have childcare expenses. You probably will have some soon when preschool starts. It’s well worth it. Our kid is more sociable and he’s making a lot of friends. Seattle housing is pretty crazy too. Glad to have you in the FI/RE community!

  • Stefanie OConnell November 30, 2015, 9:55 am

    The price tag of my modest lifestyle has increased significantly because of my income. I used to qualify for free healthcare, now I’m paying $300/month (and it’s probably going up in 2016). I’m also spending a lot more on my business which is the reason I have higher income to begin with, but I definitely feel like I’m on a bit of hampster wheel, without really having committed any true “lifestyle inflation”.

    • retirebyforty November 30, 2015, 11:18 am

      Health insurance cost will increase quite a bit under Obamacare next year. I think my mom is paying 20-25% more in 2016.
      I’m spending more on my business too, but that’s will offset the income.
      It’s still good to keep your lifestyle inflation under control, though. It will pay off in the long run.

  • Amy November 30, 2015, 8:20 am

    Can you total it up to make it easier for your readers?

    • retirebyforty November 30, 2015, 11:16 am

      I updated the article. Thanks. 🙂

  • freebird November 30, 2015, 7:51 am

    Unfortunately my spending is way above the EPI bottom line for my zip code, so I guess not. Housing and healthcare are about right, while for food, car, and “other” mine are lower than their numbers. What balloons my monthly costs is that last item– taxes (federal income, state income, SS and Medicare) which are several times my rent.

    How do I stop splurging on this? Taking on a big mortgage could reduce taxes, but it would increase housing costs so it won’t shrink the bottom line. I suppose if I quit working and dump those dividend paying stocks in favor of bank checking accounts, I could reach a modest lifestyle, but I think I’ll continue living large for now.

    • retirebyforty November 30, 2015, 11:15 am

      I updated the article with some comment on taxes. I don’t know why they put it on here. Tax is highly dependent on income.
      There are many ways to decrease your tax liabilities, but it will change your lifestyle greatly. Having a kid, for example, is probably too much trouble to just get tax deduction.

  • Mike Drak November 30, 2015, 7:43 am

    Your comment about having a small living space with limited storage is a key element in living a modest lifestyle. I remember when we lived in a small condo, everything seemed so much simpler then. The limited space forces you not to buy and accumulate things and instead invest your money into better things like the annual adventure that your family takes. I’m embarrassed to say that while taking out the Christmas decorations this weekend I was surprised by the things I owned that I had forgotten about and did not use anymore. This would never of happened in a smaller living space. maybe it’s time to downsize.

    • retirebyforty November 30, 2015, 11:13 am

      Living in a smaller space has some advantages. You don’t want to buy anything because there are no place to put them. It definitely help us keep our discretionary spending low. Our rental has a basement and it will be a challenge to keep it clear once we move there.

  • Justin November 30, 2015, 7:28 am

    I guess we are living a modest lifestyle by most metrics in Raleigh NC. I checked the Family Budget Calculator and got a number that was only $100 less per month than yours. Housing was at $856 per month, and you could rent a modest (but decent) 2 BR place on that budget, so maybe that part of it is more accurate than for Portland.

    Our housing costs, even with a paid off mortgage, are still many hundreds per month between taxes, insurance, maintenance and utilities. Other areas in the calculator we do much better. That’s because we dine mostly at home, take care of our own kids (not working helps immensely), drive simple cars, and don’t pay much tax!

    • retirebyforty November 30, 2015, 11:11 am

      Housing is our big problem. I don’t think we can decrease it much unless we move to a lower cost of living location. You guys do very well with tax.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.