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. This enabled me to increase our net worth steadily 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 didn’t work together as a team.

I’m very grateful for my good fortune, but it wasn’t all luck. One thing that was always under our control was our lifestyle. We live modestly and never accumulated any consumer debt. Our income rose steadily throughout our 20s and 30s, but we always lived below our means. We still live modestly, but we don’t feel deprived at all. I think this is because we value financial security much more than anything else. Well, we enjoy travel as well and we don’t skimp on that.

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 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 want to share how much our modest lifestyle costs. 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 the location can make a huge difference in the cost of living.

*This post was originally written in 2015. It is updated for 2022. It’s incredible how much the cost of living increased over the last 7 years. In 2015, the cost of living in Portland was around $5,000 per month according to the Economic Policy Institute. By 2022, the monthly costs increased to $7,154. That’s a huge increase.

Wow, it’s expensive to live in Portland. We spent much less than this in the first 9 months of 2022.

*EPI’s Family Budget Calculator measures the income a family needs in order to attain a modest yet adequate standard of living. The budgets estimate community-specific costs for 10 family types (one or two adults with zero to four children) in all counties and metro areas in the United States. Compared with the federal poverty line and the Supplemental Poverty Measure, EPI’s family budgets provide a more accurate and complete measure of economic security in America.

RB40 Household Modest Lifestyle

Housing – $1,300

In 2019, we moved from our old condo to a duplex. We rent out one unit and live in the other one. Our unit is pretty small. It only has 2 bedrooms and one bathroom. It’s getting a bit tight now that our son is 11 years old. But whenever I think our home is too small, I’d remember that my family of 5 lived in a small apartment when we immigrated to the United States. We plan to take over both units in the duplex when our son enters high school. He’ll need more space then. Our housing cost will increase to around $2,000/month in about 3 years.

Currently, we spend about $1,300 per month on our housing. That includes mortgage, property tax, insurance, HOA, and utilities. This is lower than the modest budget from the EPI.

However, I think the EPI’s $1,536 estimate is way off for Portland. A 2-bedroom apartment costs over $2,000/month here. You’d have to go out a bit to find more affordable apartments. The estimate includes 3 counties, so I guess it makes sense.

Food – $600

We usually spend about $600 per month on food. These days, we mostly cook at home because restaurants are very expensive. We shop at WinCo and Safeway, and rarely visit expensive stores like Whole Foods. When we go out, we usually go to family-friendly ethnic restaurants. 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 – $50

Woohoo! In 2015, we spent about $500/month on childcare. Now that he is in school, we don’t have to spend anything. In 2022, this category changed to various kid stuff like clothing, toys, and entertainment.

Transportation – $200

This is a good category for us. We share one car that we own free and clear. We rarely drive and fill up only once or twice a month. The category includes gas, car maintenance, insurance, parking fees, public transportation fees, and speeding tickets. Ugh, I got a speeding ticket earlier this year.

Healthcare – $400

Currently, we spend about $400/month on health. We’re pretty lucky because we’re 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, but it is getting higher as we get older.

Other necessities – $1,900

“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. Our biggest miscellaneous expense is travel. This year we traveled to California, Thailand, and the Maldives for 3 months. We had a great time and plan to take a trip every year.

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 because he grows so fast.

Taxes – $1,115

This one is highly dependent on your income. I’m not sure why the EPI includes it. I’ll just use the same number as the EPI.

Overall – $5,565

Overall, we spend about $5,565 per month on our modest lifestyle. That’s about 25% below the EPI’s estimate ($7,154). It’s pretty interesting because we spend more on some items, but less on others. We spend much less on the “Big 3” expenses than the average family. However, we spend much more on travel.

Actually, our spending changed a lot since 2015. Our housing expense decreased because we moved into our duplex. Previously, we paid quite a bit more for housing. We also spend a lot more on travel now because our son can travel more.

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. And we can still save a good amount every month. Let’s put some of what we do in bullet points.

  • We rarely buy new things. Our living space is pretty small so we don’t have a lot of storage. Replacement is the current policy.
  • Avoid luxury goods. Luxury goods just don’t excite me. I value financial security much more than luxury. Midrange goods are perfect for me.
  • Don’t compare our lifestyle with our neighbors.
  • Use things until they break/wear 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-knacks anymore. They just collect dust.

Our modest lifestyle is comfortable for us. We enjoy what we have without feeling like we need to buy more things. We splurge on international travel, but I think that’s well worth it.

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

If you want to keep track of your finances, sign up with Personal Capital to manage your portfolio. They have many great tools for investors including the 401k Fee Analyzer and the best retirement calculators on the internet. I log in almost every day to check on my accounts.

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

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44 thoughts on “How Much Does It Cost To Live A Modest Lifestyle?”

  1. I tired to live an extreme frugal lifestyle for the past 3 years using < 10,000 a year. It's doable when single and childless, and my only entertainment is to get books and Internet from the library. I made all my meals, and live in my own apartment. But I would say 20,000 for one person if I am more in an average modest lifestyle.

    • Wow, that’s really low. It wouldn’t even cover the cost of housing in Portland. Do you rent a room or something like that?
      There are lots of free and low-cost entertainment in our area. Fortunately, we don’t have to spend a lot of money in that category.
      Except, travel…

  2. I think our daily expenses are modest, but a 15-year mortgage and big education expense makes it seem expensive. I don’t track all of our expenses very closely because there’s not much that can be done about them. For example, once you have an efficient house with solar power, it doesn’t make sense to scrutinize the cost of utilities.

    This is still a fun exercise. Our annual total is $98,768 in Newport, RI with 2 kids. That’s about what I projected we’d need when my wife retires. We just get to the numbers in a different way (spend more money on house and less on child care). That’s the weird thing about averages.

  3. What a fun tool! Looks like a family of 4 in Minneapolis, Minnesota area averages $8,292/month in 2022. We’re closer to $6,700/month, but only one kiddo is in childcare, full time. It’s definitely hard to imagine how we would make it on a single income.

    Return volley question for you: how do you guesstimate what you’ll need for monthly retirement expenses, assuming no dependents, and looking ahead 15 years??

  4. Quite the change since the palm tree days of 2015. Although I must say I shop at Whole Foods, not every week, and honestly it’s not much more expensive if at all. At least when you buy produce and store brand stuff. I found organic apples to more expensive at Safeway. Where they get you is buying bakery items, prepackaged snacks, kombucha and the like.

    Also, one thing I’d want to add for my own is giving/free money. I think being too modest or tight on the grip we end up not giving to causes like our neighborhood 4th of July festival or the fundraising for the local park to be renovated. It improves our lives so we can enjoy more of the “free” entertainment.

  5. Seems like you’re on a good path forward. Out of curiosity, would you ever consider moving away from Portland, as I know its a very high cost of living location. You’d prolly get more bang for your buck elsewhere. Just a thought.

    • Yes, we plan to move after our son goes off to college. Unfortunately, we probably will move to an even more expensive location – California…
      Mrs. RB40’s parents live in CA and they’ll need some help as they age.

  6. I plugged our numbers in and we spend about what it said for our county in the Midwest. Our largest expense besides taxes and saving for retirement is property taxes @$7k/year. Our metro area has much higher property taxes than other towns in the Midwest. We live well below our means and are on the last big push to retirement in the next year or so.

    We have always lived a modest lifestyle and it has paid off in the end. We will be able to retire with dignity. We don’t feel deprived and are able to spend freely when we do travel or go out to eat, b/c we don’t do often. Earlier in the year we did a Disney trip with our daughter’s family and made the choice to pay extra for the hotel and view of Cinderella’s castle and the nightly fireworks. Other people would have chosen differently and would have been able to stay more days than we did. But hearing the 1 year old squeal and laugh every night when they were going on is a treasured memory we could not put a price tag on. We were only able to do this b/c we cut back hard on the things that don’t matter.

  7. 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

    • 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. 🙂

  8. 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!!!

  9. 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).

    • 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.

      • 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.

  10. 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%.

  11. 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! 😉



    • 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

  12. 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

    • 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!

  13. 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.

    • 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.

      • 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.

        • 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.

  14. 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!

  15. 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.

  16. 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!

  17. 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.

    • 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!

  18. 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”.

    • 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.

  19. 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.

    • 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.

  20. 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.

    • 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.

  21. 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!

    • 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.


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