The Monthly Nut Ratio

What is your Monthly Nut Ratio? Conventional wisdom says your fixed expenses should be under 50%, leaving 30% for flexible spending and 20% for investing. What if you could increase your income or lower your payments? Maybe push your fixed expenses down to 30%, 20% or 15%?


Some people track their net worth, savings rate, or cash flow. Maybe we should start tracking our Monthly Nut Ratio?

It’s a simple formula. Just take your fixed expenses and divide it by your monthly income.

Fixed Expenses/Monthly Income x 100 (for the percent)

Every time you pay off a credit card, car loan, student loan, medical bill, or the granddaddy of payments…your mortgage: Your Monthly Nut Ratio will move down.

Every bill you can make smaller – cell phone, car insurance, gym membership – your Monthly Nut Ratio moves down.

If you can add a side hustle, earn a raise, or create some passive income: Down goes your percent.

If your starting at 60%, every 10% drop will feel like a weight is being lifted. At 50% you will breath better. At 40% you will sleep better. At 20% you will feel like a freaking Rockstar.

 Every good decision you make will be instantly rewarded by your monthly nut ratio.

If you get a better deal on your cell phone bill, your net worth might not budge. But your Monthly Nut Ratio will congratulate you!

I don’t think anyone really loves paying bills. So you won’t be sad if they go away, or get really, really small compared to your income. In fact, I bet you will start to feel rather rich. The less obligation is weighing you down, the more freedom you will feel.  All of a sudden you have more financial freedom, more adventure, more room for generosity.  I know we feel that way. And here is why…

Our Monthly Nut

If you add up all of our fixed expenses, those bills we have to pay every month, it comes just under $650.

We have 3 cars, a motorcycle, a pop up camper, a 4 bedroom/2 bath house, and 5 kids. On any given month we might spend $3100 (March), $2445 (April) or $2200 (January), but only $650 of that was earmarked for bills. That makes us feel rich, folks.

The Breakdown

Housing Costs

Property tax: $133

Home owners insurance: $40

Utilities: $105


Cell Phones: $66

2 Gym memberships: $60

Internet: $66 60

Netflix: $10

Car insurance: $57 (for 2 liability and 1 full coverage)


Life Insurance: $52

Dental: $60

Grand Total: $649 $643

Honestly I LOVE having such a low monthly nut. I am much more prone to pay for something upfront vs feeling like the payments are looming over me. Our Monthly Nut Ratio is the main reason we have been able to take a year off. Our low monthly commitment gives us a lot of choice and freedom.

The income from just one of our rentals, covers almost 100% of our monthly nut.

There is synergy when you add passive income, investment income and low fixed expenses. If you want more flexibility in your financial life, that is the magic formula. It’s not a life a deprivation. In fact, it’s the opposite. You have a much bigger percent of your income that can be used toward adventure, hobbies, or early retirement funding. Finally, your bills don’t eat all your income.

 If you could have really low Monthly Nut Ratio, what might change in your life?

What might be different with out a house payment, car loans, or debt payments? If your passive income could cover all your hard expenses, do you think you would feel like you have more financial freedom? Or would you be more likely to run out and take on more payments if you had too much cash lying around each month? (Don’t laugh, you know people totally do that!)

Have you been able to lower your Monthly Nut Ratio? Want to share it here? =) We will only cheer you on!

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50 thoughts on “The Monthly Nut Ratio

  1. Welllll….. I’m not at a good ratio because I’m working on building up entrepreneurial side hustles with my blog as an “early retiree.” That said I think it’s about 200%, so I have a burn rate that will last me about 15 years or so of not having to go back to work

  2. Thanks for sharing, it’s always interesting to see other real life examples of spending, etc. We’ve always focused hard on reducing expenses while simultaneously trying to grow income. As a result our nut ratio is close to 20 / 20 / 60. And we have no plan to incur lifestyle inflation yet, still gotta keep costs down! Thanks for the post.

    • I am going to be pulling together my net worth info soon. We generally just take a look twice a year. I like the monthly nut % because it improves with every small victory. That net worth is a slow moving beast. And even when you do everything right, it doesn’t always cooperate. It’ll come around eventually. Even with taking a year off, I think we made good gains this year. =)
      Post an update for us when you find your %.

  3. Unfortunately we’re paying for 2 households so our monthly/annual total costs are awfully high (approximately 75% of our net), and I’m always looking for ways to bring that down. While we’ve reached one major net worth milestone and we have hefty cash savings and investments, this is a huge priority for us. I don’t think leaving California is an option for either household, so I have to work around that!

    • Yeah it’s tough in areas with really high cost of living. I hear Montana is a bit more affordable. =) You wouldn’t be the first folks to move from California to Montana, that is for sure!

  4. Never heard of the Nut Ratio. It’s a very intriguing concept. If we include just utilities, taxes, and insurance, our Nut Ratio is about 8 percent. If we throw in gas, cleaning supplies, and food, our Nut Ratio climbs to 13 percent. And if we include everything, our Nut Ratio “balloons” to 26 percent. It’s amazing how much discretionary income you have when your house is paid off and you live in a relatively low-cost state (North Carolina). Excellent post as always, Ms. M. You got Mrs. Groovy and I to dust off some unused math skills.

    • That’s awesome! With out all the bills that seem standard in our day (house payment, car payment, student loans, credit cards), discretionary income goes through the roof. I think a lot of folks look at it backwards. My paid off cars (although older) don’t make me feel poor. They make me feel rich because I have SO much extra cash each month. Having all your income eaten up by bills makes a person feel broke, even if they do have a brand new car. Glad to hear your math skills got a little exercise. =)

  5. This is the embodiment of our long-term plans. Thank you for giving us some additional confidence that it will work! We just need to get rid of our debts, make some modest investments, and then we can taste freedom while living a frugal lifestyle 🙂

    • Exactly! People we know think it’s a little crazy that we could do this, but it’s not all that complicated. Just keep going, and you’ll be there before you know. I’ll have your ice cream ready!

  6. Well, this was an eye opener. I knew that taking on a mortgage was going to be a stretch, but yowza. My fixed expenses are high. I added in my grocery and entertainment money, though. I don’t think I’m supposed to do that. And I budget high for gasoline and don’t usually all that’s earmarked. I’m definitely going to work on getting some of them down. I want to breathe easier!

    • A mortgage is tough. Banks feel very comfortable with that alone being 30%. And technically is just fixed expenses (basically anything you get a bill for). Car/house/health/dental/life insurance, cell phone, cable, utilities, car registration, property tax, any payments. It’s like the cost for just showing up. Before you even swipe your debit card. But I think it’s cool because you can make a little dent with every bill you lower. Switch cell phone plans, and it can go down. Find cheaper car insurance, down it goes. It’s like instant high five for a job well done!

  7. Oh wow, your monthly expense is ridiculously low. Great job! I haven’t checked our ratio recently, but I think we save around 40%. So the monthly nut ratio should be around there. Shouldn’t you include groceries and taxes in the nut?

    • Thanks! Generally you only included fixed expenses, ones that you get a bill for. So we don’t include any of our flexible spending like food, clothes, gifts. As far as taxes, I do include the fixed taxes, like property tax. We have permanent plates on our cars, so we never have to register them again (Montana is awesome!) or that would be included. You could include income tax. Our income tax is crazy low, like maybe a negative number (5 kids!).

  8. According to this definition our monthly nut is about $720 which includes preschool during the school year. But we normally include things like giving, groceries, and gas in our non-negotiable monthly expenses. We might be able to spend less on those some months, but they are not going away completely. For planning purposes, we count them. I see what you’re saying about feeling rich due to low monthly bills, though!

    • That is a great number! I thought about adding giving, but I hate to think of that as a bill. =) I have a lot of friends that the bills eat up 70-80% of all their income. It’s stressful, even if a person has really high income.

  9. Sorry if I missed this in the post, but would you use pre or post tax monthly income to calculate?

    I LOVE this concept! What a fun challenge for myself.

      • I have a consistent monthly income and then a quarterly bonus check (which we save 100% of).

        Using our monthly income: 48% nut (ugh)
        Using our annual income (with bonus checks) and expenses x12: 37%

        I’m also not factoring in healthcare, since it’s taken out of my check before I see it.

        We just dropped from two income to one this month as my husband is now staying at home with our son, so before that our nut would’ve been 34%. We’ll have to find some wiggle room in the budget to trim it back down on just my income!

        • That is really good! Thanks so much for sharing. And it’s great that your husband can stay home now. There were times when both of us worked and did daycare, but it was always a bit stressful. I found our spending dropped a bit when I stayed home, and then again when Mr. Mt quite his job. It’s just easier for us to do cost saving things, like make meals from scratch.

  10. This is really cool. Both our income and expense are very much in flux right now. Once everything is settled, I want to run a comparison pre and post move.

    Your fixed costs are super low which is awesome! I’d guess our pre-move ratio was fairly low due to high income and paid off cars. Great post!

    • Sounds great! The high income is always a good help. That combined with low rent/mortgage can be a powerful combo. Paying cash for our house was the game changer in a lot of ways for us.

  11. My nut ratio is higher for now, but I’m investing in my business and my skills for my full-time job. Soon there will be a switch and I can pay down the student loan payment, which is the biggest part of my nut.

  12. My nut ratio is 37% fixed costs, 35% spending, and 28% savings. Not too bad, but hoping to shift a couple more % from spending to savings and reduce fixed costs if I can.

    • That is awesome! Thanks so much for sharing. I bet you are making great progress with 28% being funneled into savings. Good luck with lowering those fixed cost. It’s a pain but so worth it. We need to call our internet provider because they just raised the rate, again. Let us know when you knock that down a bit more!

  13. Nuts. What a great ratio! A truly unique way to look at your savings rate, and an immediate indicator of how small changes can build a good stockpile of nuts. We just paid off our house, so our nut ratio just “cracked” (nice pun) the 30% threshold!! Cool way to look at things, thanks for the concept!! (Also, congrats on the RockStar fame, well earned).

    • Congrats on paying off the house! That is huge! I love being able to celebrate the small victories as well. A $200 a month raise, or cutting the cell phone bill in half. The lower that monthly nut is, the better I feel. Plus it takes the shine off of adding payments. Sure a newer car could be more comfy, but look what it will do to the monthly nut between payments, insurance, and taxes. And I love hanging out with the Rockstar Finance crowd! Salt of the Earth.

  14. I do know and track my net worth as well as general expenses rate but Monthly Nut Ratio has sort of become a new thing to me here. It’s great I know now. All I need is to separate my fixed expenses from the flexible ones to get the calculation done.

  15. Can’t believe I missed this one Ms. MT. The monthly nut ratio is really an awesome concept. I’m not sure how to account for the fact that I got rid of the mortgage debt, but replaced it with a larger asset and a cost of rent. But have capital from the sold real estate asset that could easily be used to buy a nice small-ish property in many parts of this country….so do I really have a rent cost of $0 because my capital from prior real estate could pay for several months of rent, or is that just me trying to cheat with a game of mental math gymnastics? 🙂

    I feel like my fixed expenses are pretty rock bottom other than my rent:

    Housing: $925
    Internet: $50
    Disability Insurance: $127
    Life Insurance: $60
    Car Insurance: $97
    Renters Insurance: $16
    Umbrella Insurance: $12

    Cell phone, gym membership, medical/dental/vision insurance are all free perks that I don’t expect to go away in the near future.

    Against last month’s income, It’s about 29%, but if I cheat and overlook my rent cost, it’s more like 8%. And I haven’t been saving 70% of my income every month, so obviously there’s some variable luxury in my life.

    It definitely feels financially freeing to know that my taxable assets can buy me time. It’s the only reason I feel safe taking a year off. Of course, I’m someone who needs a greater purpose than myself and I don’t know how I fill that void by exploring nomadically forever. It’s nice to know that I won’t necessarily require a minimum salary to support myself going forward if a job is particularly intriguing in one of my passions. I would love to try to break in to the non-profits assuming I can maintain a work/life balance in one of those roles.

  16. Just curious, what benefits are included with your dental insurance and who is covered under the plan? (I’m a dentist)

    • I’m actually planning on dropping the insurance because the math doesn’t really make sense. It’s $60 just for me, covers about 80% of cleanings (2 per year), 50% of everything else, and caps out at paying out $1500 a year. At $20 or $30 a month I would keep it, or if that amount was for 3+ people.