What is the minimum you could live on?

Determining the minimum amount of money you could live on is important for determining your emergency fund and other financial goals.

Let me get this out of the way. Reducing your spending sucks.

Focusing on “how you could spend less” is the wrong way to deal with money. It creates and reinforces a scarcity mindset, and keeps you from more expansive decisions, like “how could you make the money you want” so that you don’t have to spend less.

So please bear this in mind over the following post. Because while I’m not a fan of minimalism or frugality, I do think it’s important to know how little you could live on if you had to pare down your spending.

You may know how much you are living on right now. But do you know what you could live on if you had to live on less? Could you live on less?

Let’s figure this out now.

Your emergency fund is built from your minimum

How much money should be in your emergency fund? You may have heard people say “3-6 months”, but 3-6 months of what? Income?

No, not income. The size of your emergency fund does not need to be (and should not be) based on your income. Rather, it is based on your spending.

And no, they aren’t always the same thing.

So how do you determine how much you could live on in a month, so that you can determine how much you might need in your emergency fund?

There are a couple of ways to answer this question.

Easy Pause

The first way to answer this question is by answering: “What could I easily stop spending money on in an emergency?” What would you pause?

The things that come to mind here are:

  • Putting any money away in savings
  • Paying down debt (extra payments beyond the minimum)

Putting money away and paying down debt are things to stop in an emergency, with no lifestyle changes necessary.

So in this case, to find out how much you could live on, take your average spending for a given month, and remove the savings and extra debt payments.

And for your emergency fund, multiply that number by 3-6.

Subscription Pause

The next way to reduce your monthly spending needs is to pause some subscriptions.

What subscriptions could you do without if you needed to? Sure, some would be easier than others, but you probably don’t need any of these:

  • Amazon Prime
  • Costco
  • Gym membership
  • DoorDash DashPass (or equivalent)
  • Spotify
  • Premium media/cable subscriptions
  • Cleaning service

(Yes, I just had the gall to suggest you cancel Amazon Prime. But this is an emergency. Don’t forget that if you don’t need things fast, shipping is free on Amazon.)

You could easily reduce your monthly needs by hundreds of dollars, just on subscriptions alone.

This, combined with your savings and debt pauses listed above, would allow you to live on even less.

And make your emergency fund even smaller.

Lifestyle Pause

You probably won’t be spending money in the same way if you didn’t have a job, or needed to live on the minimum amount you could.

For example, you won’t be going out to restaurants nearly as much, if at all.

So, after you have reduced/paused your subscriptions, you could also look to lifestyle changes.

Now there are lifestyle changes and there are lifestyle changes. On the light side, there is buying groceries and eating out less. On the heavier side, there is selling your car and getting around on the bus or by bike.

With this in mind, I would think of a range of spending reduction: lifestyle changes you can make that would be challenging but not disruptive, and all the way down to disruptive lifestyle changes.

Hey, I didn’t say this was going to be fun!

Going for broke

Somewhere in the above determination, you have what is likely your minimum for how much you could live on.

There are deeper cuts you could make, such as moving out of your home and crashing with a friend or relative, but that’s a different level of emergency, one that doesn’t really serve you to contemplate too much, unless you’re in the throes of a massive, long-term emergency.

So the tiers of reduction go like this:

  • Easy Pause (pause debt and savings)
  • Subscription Pause (cancel unnecessary subscriptions)
  • Lifestyle Pause (light) (going out to eat less, etc.)
  • Lifestyle Pause (heavy) (making larger changes)


I think it’s useful to give an example here.

Chris works for an insurance company and makes $90,000 a year. This translates into a monthly take home pay of about $5,000 after taxes.

Chris puts away $1,000 a month and pays $500 extra on the mortgage, and spends the rest. So going by the Easy Pause, that’s $3,500 to live on per month minimum (and a $21,000 emergency fund).

When it comes to subscriptions, Chris could easily pause $400 a month without really feeling it too much. So adding in the Subscription Pause, that’s $3,100 minimum to live on per month (and an $18,600 emergency fund).

If it came to making lifestyle changes, Chris could probably reduce life spending by $300 on the small side, to $1,100 on the large side. So with the Lifestyle Pauses, that’s $2,800 minimum ($16,800 emergency fund) all the way down to $2,000 minimum ($12,000 emergency fund).

So as you can see, coming from with a $90,000 salary and $5,000 a month take home pay, Chris could live on a minimum of $3,500 a month, going all the way down to $2,000 if things got dire.

I hope you never need to execute this minimum plan

I do not, in any way, want this to make you think that I am advocating for simpler, less expensive living. Similarly, I don’t think you need to cancel all those subscriptions. I don’t want you to eat out at restaurants less either.

I want you to spend intentionally, and on things that bring you joy. But I also want you to have the money to do all that too.

All that said, it’s a good idea to know what you could live on if you needed to, not because it’s a goal to work to.

And this work will help you determine the right size of your emergency fund. After all, emergency funds are a lot of money sitting around, and it takes time to build one up. Don’t put away any more than you think you might need to.

Once you have your emergency fund put away, not only can you rest more easily, but you can also use your funds to invest and build wealth, secure in the knowledge that if you absolutely had to, you could live more simply for a short period of time.

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