Managing Growing Spend
Last year I spent a lot. ~$600k when my estimate was $400k.
For context, our family unit is my wife, me, and two dogs—a home in California and a condo in Illinois.
I try not to actively hold back spending and enjoy buying things that bring us joy. Trips, dinners, clothing, whatever it may be. I’m not buying watches every month, flying first class much or designer clothing, but it all adds up.
We won’t have to work again from an annual spend like this, but it still is surprising/shocking. At the end of the year, I look at the total spend and realized it’s not the regular monthly spend that throws my “budget” off, but one-off, large expenses.
Historically, I always looked at monthly expenses, and when a large one-off item came through, I said to myself, “Well, that’s just this month”. Maybe you’re like me and find yourself saying that a fair amount throughout the year.
So this year, I’m trying something new to better understand what we might spend.
First, I’ll be looking at spend annually, instead of monthly, to help smooth out the large lumps. I gauge portfolio preference annually, so I should look at spending that way, too.
Lastly, I spent 20 minutes with my wife to write down as much as many one-off things we wanted to do this year as possible. Items like a trip to Europe, Tahiti, Costa Rica, a small home renovation, and visiting a tennis tournament made the list. Anything that may be greater than $2k in spend. I also added a $20k slush fund for things that may arise we want to experience or do.
I then added that list to my average monthly expenses to get a sense of my overall spending for this year.
Hopefully, there are no year-end surprises now.
Keep you posted if it works!