Reviewing our spending in 2018 and pinpointing how we can easily save more money in 2019
Once you’ve got your budget and have been using it for a few months, you’ll be able to see where your money is actually going. This insight is incredibly powerful and allows you to put your budget to use in a real way that will help you save money.
My wife and I have found that through reviewing our spending over the course of six months or a year, we’re better able to tell how we can reduce our spending day-to-day in certain categories based on our tendencies. It allows us to make behavior changes based on real data, not just feelings. We’re by no means perfect. Not even close. Which means we can keep trying to do better.
Abagail and I identified the following spending categories at the beginning of 2019 based on our 2018 spending as easy places we could cut back without impacting our quality of life. We wanted to reduce spending in categories where the change would be significant: at least $100 or more. Here’s what we cut back on and how it’s been going.
Practical advice on how to approach budgeting and stick with it
Budgeting can be a bit daunting at first, especially if you’ve operated without one for a long time. But the more you do it, the better it gets. It eventually becomes empowering. Regardless of what tool or technique you use for budgeting, here are some practical ways to make budgeting easier.
Abagail and I combined our finances not long after getting married. It made sense on emotional and mathematical levels. We’re working together as partners, and it’s our money. Not my money and her money. Our money. Also, if we combine our investments, chances are they’ll grow even faster.
As part of combining our finances, we started budgeting together. We call the time we intentionally sit down and talk about our money a budget date. We have one each week. Usually on Friday nights because every other Friday is payday. We pull up good ole YNAB after dinner and review where we’re at.
Eels. Stuck onto you and leaching money from your life. They’re everywhere, especially in the age of online services.
Eels are recurring expenses, usually monthly, that are so low that you might even forget you’re paying for them (which is what those businesses want). Netflix, Spotify, Hulu, iCloud, Amazon Prime, Dropbox, etc. Services where you pay for access but don’t own anything. You’re expected to pay in perpetuity.
I’ve been working on being more intentional with how I spend money. As part of that, I ask myself a series of questions before I buy anything. I mapped this out into the flowchart above. I use it in conjunction with our budget to ensure our money is being spent wisely.
Gaining insight into spending and achieving financial goals
I’ve been budgeting with the app You Need a Budget (YNAB) for three years now, and it’s totally changed how I think about money. I’m in a much better place financially because I can see where my money is going and make sure each month is covered. Over the last few months, my wife and I have started budgeting together, which has made the process even better. Here’s how we approach budgeting as a couple.
Setting financial goals, minimizing what we don’t need, and saving over 50% of our take-home pay
My financial mindset for the last few years has been pretty simple:
No debt, at all costs 🙅♂️
Have at least three months of safety net saved up 💰
Max out my Traditional IRA annually 🏖
My wife and I have managed to avoid debt, build up a safety net of six months, and contribute to our retirement accounts as much as possible. Beyond that, we weren’t really sure what to do. So, inevitably, we spent our extra cash. Not on anything too lavish or wild, but we weren’t mindful and didn’t have a plan. Until now.