Maybe you read my last post, got a bit motivated, picked your money management tool and got to work. If so — YAY! Virtual hug.
If you have no idea what I’m talking about or need a quick refresher, start here.
This process will inevitably bring up unexpected questions. I will give you examples by explaining how I categorize my spending now, what I used to do and reasons why it might have changed.
I picked a high transaction week in December to give you a wide view. This is a particularly spendy time period is due to a few factors:
- The dead week between Christmas & New Years
- Last days of gift buying (in fact I'm noticing a few things there that I need to grill my husband about LOLZ)
- We are planning for a big trip in summer ‘19
Mint gives you a LOT of options in which to categorize. You can choose to keep it high level or get granular. I do both.
Bills & Utilities
One thing I have kept fairly consistent is how I manage this category. I define “bills and utilities” as the things the things I AM REQUIRED TO PAY or CHOOSE TO PAY MONTHLY. Examples:
- Mortgage or Rent
- Power, Water & Gas
- Internet & Phone
- Life Insurance
- Security System
- Student Loans
- Day Care
There are many schools of thought here. Some people think that your mortgage and rent should be its own “housing” category because you “should be” spending 25% of your net income on housing. Some people will break out student loans or a housekeeper since it’s not a utility. Mint has an “education” category and “home” category for these purposes. I actually put daycare/529 in a separate “kids” category.
This is where I want you to think. What do you want to see? How do you want to see it?
Here is how I categorized in June of 2016. You will notice I used some subcategories back then. My total for this month was $3,254. Insert huge “ah ha” moments here, but I’ll write about those realizations later.
Today I categorize differently because there are so few transactions that it’s silly to get granular. Here are my bills and utilities for October 2018. My total for this month was $350.
Food & Dining
CRINGE. This has historically been a complicated topic in my household. We have finally settled on a number that works for both of us. If you follow either of us on the social medias, you know that food is a very, very important to both of us. It aligns directly to our values.
However, we had a problem. In June 2016 we spent $1,927. What the living fuck, we were clearly sprinkling gold flakes on every meal. We categorized simply — coffee, restaurants, and groceries.
Today we have settled on $1200 per month for food for very specific reasons. Here is a fun twist — consider if you are using food as entertainment. Do you put the brunch at Milktooth in “restaurants” or in “entertainment” or maybe it changes depending on the situation? This might change your perspective and future budgets.
Auto and Transport
Ok, one more easy category example because if I keep looking at my ’16 spending I’m going to be sick.
June ‘16 Categories:
October ’18, the month I paid my last car payment and registered our new teardrop camper:
As I took this time to reflect back on how I viewed spending back in ’16, I noticed a ton of things I would have done completely different today. Guess what? That is ok. It’s all part of the process. In fact, you might go through this exercise and change it in six months.
Remember, right now you are simply observing. Log in every 2–3 days. Categorize your spending. Every week or so acknowledge where your money is going. Write down your observations. Talk with your partner. Reflect. Don’t take action yet.
Please write questions below and I’ll address directly or in future posts. If you feel so inclined, use the “clap” to give me positive feedback.