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Now that we’re a quarter into 2019, I thought it would be good to take a look back at our spending from the previous year. The best way to improve is to identify where you’re at and where you want to be.
A few of my 2019 goals also involve areas of our finances, including maxing out all our retirement accounts and increasing our net worth. If you’re serious about improving your finances this year, the two biggest keys I’ve found in my experience is having the motivation to make your finances a focus in your life, and tracking your expenses.
With the proper motivation you’ll be able to power through even when the inevitable obstacles arrive. With tracking your expenses, you become aware of where money is being spent. This has a profound impact, not only on your spending patterns, but also on your mindset towards money. It becomes much easier to find areas to cut back on that aren’t bringing you value.
I wanted to use this post to shed some light on what our spending looks like, in hopes it can be encouraging to others on their financial journeys. It also keeps me accountable and helps us track our progress to make sure we’re on the right path to our long-term goals.
Tracking Expenses and Monthly Budgeting
We use Mint.com for our monthly budget, which made compiling these numbers very straight forward. It’s no exaggeration to say that tracking our spending through Mint has been life changing for us. I spend a few minutes each day to ensure all our expenses are categorized properly and making sure we’re aware of where our money is being spent. Looking at the year end totals helps make sure we’re on the right track to reaching our long-term goals.
In order to provide context, I’ll do a quick recap of our 2017 spending too. You can also check out last year’s post for the full breakdown. Note that these charts only depict our spending, not our savings or investment contributions.
2017 Spending
Here’s how the percentages breakdown:
- Home 43% – (includes rent, renter’s insurance, water, trash/sewage)
- Auto & Transport 11% – (car payment, gas, car insurance, maintenance/repairs)
- Education 10% – (all the money we put towards paying down our student loans)
- Giving 9% – (church tithe and other charitable giving)
- Travel 9% – (includes airline tickets, accommodations, sights, food)
- Bills & Utilities 4% – (electric bill, cell phone, Internet – we cut cable this year)
- Food & Dining 4% – (groceries and restaurants)
- Pets 4% – (pet supplies/veterinary visits, training class, Rover boarding expenses)
- Shopping 4% – (home supplies, clothes, gifts)
- Misc 2% – (entertainment and various other small expenses)
A few thoughts on our 2017 spending:
2017 was a very eventful year for us. My previous employer did a round of lay-offs early in the year, which prompted us to switch up our debt repayment strategy to be more conservative. Instead of paying our student loans down so quickly, we started to increase our emergency fund. This strategy proved to pay off, as I lost my job and was out of work for about 6 weeks.
Both our net worth and cash savings both increased, despite the brief period of unemployment. Our biggest goal heading into 2018 was to kill off the rest of our student loans.
2018 Spending
Here’s how the percentages breakdown:
- Home 40% (-3%) – (includes rent, renter’s insurance, water, trash/sewage)
- Education 4% (-6%) – (all the money we put towards paying down our student loans)
- Auto & Transport 18% (+7%) – (car payment, gas, car insurance, maintenance/repairs)
- Shopping 4% (+0%) – (this covers home supplies, clothing, pet supplies/veterinary visits )
- Pets 4% (+0%) – (pet supplies, veterinary visits, dog-sitting)
- Bills & Utilities 3% (-1%) – (electric bill, cell phone, Internet, cable)
- Food & Dining 6% (+2%) – (groceries and restaurants)
- Giving 10% (+1%) – (church tithe and other charitable giving)
- Travel 5% (-4%) – (includes airline tickets, accommodations, sights, food)
- Misc/Other 5% (+3%) (entertainment, laundry, other smaller expenses that don’t fit in other categories)
A few thoughts on our 2018 spending:
2018 marked a lot of milestones for us. Not only did we finish paying off our student loans, we also paid off the rest of our car loan to reach full debt freedom! We were very excited to reach this milestone. You can see in the percentages that our Education spending went down (only a little bit left on the student loans) while our Auto & Transport spending increased (money put towards paying off our car loan).
Everything else remained fairly steady. Rent obviously continues to be the biggest expense category by far. The average American spends about 67% of their budget on the “Big 3” expenses of Housing, Transportation, and Food. We came in at 64%, and hopefully now that our car loan is paid off that number will come down.
We spent a bit more on Food & Dining this year for eating out. This was a conscious choice, as a way of loosening the reigns a little to celebrate reaching debt freedom. Travel saw a big decrease as we utilized travel rewards, specifically the Southwest Companion Pass, to cut back on our Travel expenses.
In total, our spending increased by about $9,000 which is back to about where it was in 2016. This year I anticipate that number going down a little bit. Now that we are debt free we’ll be funneling all that extra money into retirement accounts and savings, which will cut down our spending number.
As always, thanks for following along and feel free to reach out with any comments or questions!
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