This past week I decided to take a magnifying glass to my expenses over the past year to see whether I could comfortably adjust to what I’d like to spend post-biglaw. Here is the breakdown:
Most of the expenses under “Travel” are work-related expenses (i.e., I was reimbursed for those expenses so they don’t really count). My actual expenses total $55K.
I’ve already worked out a budget for my post-biglaw life. The big savings is rent. My rent will go from $31K/year to $7.2K/year because I plan on living with roommates. That will also help make my life a little more social than it is now. I will also cut wayyyy back on eating out by cooking most of my food as I have been doing for the past month. I don’t plan on boring myself to death as I have allotted myself $2,000 / year to spend on travel and I will stretch that to the limit. Part of the $2,000 will go towards visiting family. My other expenses should remain relatively constant.
My health care premiums are not reflected in this expense breakdown. I plan on applying for a relatively high deductible plan that separately provides for $30 doctor visits. This $1,500 deductible plan costs $140 /mo. Also, I will have to pay for dentist visits out of pocket ($125 x 2 visits per year).
My budget is fairly comprehensive. It includes a $500 per annum allowance for gifts, takes into account my car registration fee, haircuts, inactive status bar dues, and other random expenses. All told, I am planning on spending under $1,700 a month or $20K a year. If my savings keep up with inflation (that’s a huge IF), then my savings should last me almost ten years by the time I leave. I will have a $400 buffer on average in case I want to indulge in books, movies, travel or eating out (most likely travel). By buffer, I mean I will be able to keep my overall expenses under $25K a year, which is the maximum I want to spend.
Now the challenge is sticking to the budget. My next post will address how I should invest my cash safely, in order to keep up with inflation and maybe get an extra return.