Updated: Apr 15, 2020
1.Take annual income including salary, dividends and interest.
2. Deduct money currently withheld for retirement and other savings.
3. Divide that number by 12 to calculate your monthly expenses.
Example: Joe's gross income, including salary and dividends and interest is $100,000. He puts $10,000/year into his 401K or TSP. He has 90K left and each year, he spends it all. His average monthly spending is $90,000 divided by 12 or $7500/month.