I never thought I would be saying this, but this year I’m going to budget.
I’ve always been of the option that if you’re pound wise, you can be penny foolish. For the most part it’s worked for me. I’ve never carried a balance on a credit card, always spent less than I earned, started saving for retirement with my first real paycheck, and am well on my way to financial independence.
But after reading a few year end spending recaps, I started to wonder exactly how much I spent last year. I couldn’t come up with an exact number because I had taken a break from Mint until recently. Fortunately, however, most of my spending is on my cards and I was able to come up with a rough total.
I spent $36,000 last year.
Besides rent and living expenses, this also included trips to Italy, Mexico, Los Angeles, New Orleans, and Hawaii. This probably doesn’t make any sense, but I was both pleasantly surprised that it wasn’t higher and disappointed that it wasn’t lower. I know that for a single guy living in NYC this is a reasonable amount to spend in a year, but I can’t shake the feeling that I could have been more thoughtful and intentional about my spending last year.
So how low can I go? I think the least I can spend is about $24,000 without becoming a complete hermit, but I’ll probably end up somewhere between that and last year’s spending.
And why am I doing this to myself? My hope is that by budgeting, I’ll be forced to think about if my spending is reflecting my values which have friends, family, and experiences coming before possessions. I’m sure some months will be harder than others, but I think this will also be good training for FIRE should I choose to pursue less lucrative endeavors once I reach financial independence.
I’m curious to hear what you think about my plan. Is it too aggressive? Am I in for a miserable year?