OK, next we need to determine the costs for the Definitions of Lifestyle that we came to from Step 1.
We need to define the monthly cost for each item, including all the associated expenses; taxes, utilities, maintenance, insurance etc. Don't forget to include life overheads such as health insurance, food etc.
Nice car : $750
House : $2,000
Travel : $1,000
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Lifestyle Cost : $3,750 / month
Next, determine your lifestyle monthly allowances and unknowns. This is for stuff like clothes, toys for the children, gadgets, entertainment etc. Add this to your Lifestyle Cost to determine your Gross Living Costs.
Let's say these allowances come to $1,000
Gross Living Cost =
Lifestyle Cost : $3,750 /month
Plus
Allowances : $1,000 / month
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Gross Living Cost : $4,750 / month
Next, determine your Nett Living Cost by dividing your Gross Living Cost by 0.6
Nett Living Cost =
$4,750 / 0.6
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Nett Living Cost : $7,917 / month
Now move to Step 3