In June of 2015, I officially started tracking my spending. I know, I know, most financial planners say that’s the first thing you should start doing when you’re trying to get your financial house in order. But it isn’t like I was spending without a plan: I had a budget! Each week, my paycheck was split into three different accounts: An expenses account to cover all of my set monthly, bi-annual and annual expenses, a spending account for all my variable spending, and a savings account for my emergency fund and extra debt payments.
I kept a detailed spreadsheet on my expenses account, with the entire year’s worth of bills laid out, ensuring that there was always enough money in the account to cover everything, plus a little cushion.
I made sure the amount that I put into my spending account was enough to cover our weekly grocery shopping, gas, and a little extra to keep me from feeling deprived. From time to time I’d adjust that amount up or down, depending on my comfort level and goals. But I never paid much attention to where that money went. I never did well budgeting too strictly. So long as I had the money available to spend, I’d spend it.
But around this time last year, curiosity got the best of me. I didn’t want to budget into stricter categories. But was there anything wrong with knowing where that money went after the fact? How much were we spending each month of things like food, and gas? What percentage of my income was going towards wants, needs, and savings/debt payoff?
Now that I’ve been doing this for a year, I have to admit to really liking tracking my spending. It’s a little bit eye-opening seeing where my money goes. I’m not sure it has a huge impact on how I spend. I do find myself paying a little more attention to prices at the grocery store and gas pump. It’s also made me more aware of things I need to set money aside for, such as clothing and vacations.
As I found myself coming up on a year of tracking, I started wondering what a year’s worth of spending looked like for me. Granted, it wouldn’t be a calendar year, but it would still cover 12 months worth of spending. So, I put together a new chart:
First and foremost, I spent way more than I thought over the past 12 months. Way More! To be exact, I spent $39,648. And I only brought in $33,500!
Where did the other $6,148 come from?!?!
Well, a big chunk of it came from selling my house in May of 2015. And then I had a tax refund in February 2016. Also, a big portion of the $778 in Medical CoPay spending was reimbursed by my FSA savings. I’ve gone round and round on whether to count that spending. Yes, it’s my money that I’m spending. But, since I save that money throughout the year pre-tax directly through my paycheck, it’s as if the money has already been “spent”. If I was being exact, I’d add that money into my income when it was reimbursed, so it “zeros” back out. But, admittedly, my spending updates are probably rarely exact. While I mostly use my debit card, cash occasionally comes into play, and has a way of slipping through my hands unaccounted for.
$17,492 went into paying off my car loan, with $3,540 being for regular payments, and $13,952 being “extra payments”. Paying off that loan accounts for 44% of my spending over the past 12 months! Craziness! But now, the car payment is gone, which will make my spending look much better over the next 12 months.
My “normal” rent payment is $350/month, and yet I spent $5,950 on rent over 12 months. That’s because I picked up the full $700 rent when Bryan wasn’t working. I’m hoping this Summer he can set some money aside for this coming Winter’s expenses while he’s laid off. Winter layoffs are a given now that he’s back working in the field. But, if need be, I’ll pickup the full rent payment again.
When I first started looking at the chart, I immediately started thinking of the things I could cross off as future expenses, like the $712 in grief expenses, or $521 in wedding related spending. But then Bryan’s dad passed away, and I realized, things like that are always going to pop-up. We have a lot of older friends and family. Maybe we’ll spend less some years, and more others. Bryan’s kids will get married. Someday there will be grandkids. Some years we’ll spend more on vacations, or more on gifts.
This isn’t a full representation of what we spend, since Bryan and I keep separate finances, and none of his spending is included in this. I buy most of our groceries, but he picks up the tab at Sam’s Club, where we buy most of our alcohol and the dog’s food. I pay for Netflix, but he pays for internet. I covered more of the rent this year, but he always pays the electric bill. Our landlord covers the water, sewer and gas.
Without the car payment, I spent around $22,156 over the past 12 months. That seems about right to me. Sure, there are plenty of places I could have trimmed. But overall, I don’t feel that any of my spending categories were out of line. We averaged just under $400/month on Groceries/Household. Right around $50/month on gas. $83/month eating out. $15/ month for my cell phone. It could all be better, but it could also be a lot worse! I’m pretty happy with where we’re at.
On a previous post, I responded to a comment saying that maybe I would set a new goal of trying to save 50% of my income every month. Now I don’t even remember which post I made the remark on. But it’s been swirling around in my head ever since I wrote it. And the big thing I keep pondering is “Why”?
Don’t get me wrong, it’s an awesome goal to have. And I’m sure I’d feel very accomplished if I was able to do it. But when I started thinking about what’s actually important to me, and how I track things, I wasn’t sure how it would work.
You’ll notice that my 401k savings don’t show up on my monthly spending reports. Why? Because it’s easiest for me to just track the things I spend from my net earnings. Besides, that’s savings, not spendings. My goal right now is, once I have my emergency fund back up to $5,000, and some extra money saved up for a vacation in August, to boost my 401k contribution up from my current 4% to somewhere around 25%. That gives me a little extra money in my budget each week to spend or save on other things, while majorly increasing my retirement savings. Especially since my employer already contributes 6% to my 401k.
If I counted that money in as savings vs. spending, I’d have to add it into my earnings as well. So, instead of showing my net pay each month, it would be net pay plus 401k. Which brings up other questions of what should be added back in. Should I count my FSA savings as savings? My health and dental insurance as spending? Suddenly my tracking system becomes way more difficult. And why? So I can try to attain an arbitrary savings percentage? And what if all those things didn’t equal out to 50%? Would I feel the need to restrict my spending even more, just to reach that number? I currently count my “lottery savings” as spending. Should I count it as savings, until we actually spend it? In which case, some months would look really good, and others really bad, and…
Don’t get me wrong, I have tons of respect for people who are able to save 50% of their income every month. And maybe even a little bit of jealousy that they’re able to be disciplined enough to make it work. But I feel like I finally have a system in place that works really well for me, and is working to help me reach our long-term goals. Sure, it may not be the quickest way there. But slowly but surely, we’ll make it. I’m sure with plenty of detours and changes in direction along the way.
But isn’t the journey supposed to be half the fun?
- Cindy W.