Having a strong understanding of where your money is going is the first step on any financial journey. In Managing Our Finances with Mint, I talk about how Mrs. NFF and I use Mint to track all of our financial expenses and which categories we use to segment our spending. At the end of the month, I find it useful to go through our monthly expenses to how we did, and how to respond to unexpected changes to our spending. I hope by sharing my assessment with you, can you take a similar approach with your own spending self-assessment.
August 2017 Overview: Total Spending – $7,199
I mentioned in my August Net Worth Report that August was our worst month this year in terms of spending. Some of the expenses were planned and we had been saving up for them, but the largest unplanned ones were related to the birth of our son this month. Below is a review of each of our spending categories and how we performed compared with expectations.
Home: Spending – $2,486; Budget – $2,400
Our biggest line item in this category, as always, was rent. We pay $2,300 per month in rent (I know it’s high, but Washington, DC is an expensive city and it’s actually not that bad for a 1-bedroom place). The rest of the expenses were purchases related to our son at Ikea, including a changing table and other furnishing.
Kids: Spending – $1,718; Budget – $500
Our budget of $500 for this category, at least for now, is a complete guess for us as we try to figure out how much55 our new addition to the family is going to cost us each month. That being said, it WON’T be $1,700 each month. Our biggest transaction was $1,100 for a doula to help with my wife’s birth. For those who don’t know what a doula is, it is a person who has been trained to assist the parents during the birth process. As the doctors are all focused on the baby, the doula provides emotional and physical support during contractions and the birth. Honestly, the doula’s ability to help my wife endure the contractions through proper pressure points and emotional support made the process MUCH more bearable for Mrs. NFF and for me. They are expensive, and I was skeptical as to their value going in, but afterwards I do think it was money well spent. The rest of the spending was for the last-minute supplies we did not get from friends and relatives (like soaps, diapers, etc.) so we were prepared to bring the little guy home.
Food and Dining: Spending – $853; Budget – $450
Our high spending in the category is a combination of preparing our refrigerator and freezer for the weeks after the birth when we have no time to cook, as well as poor menu planning. For a couple weekends during August, I purchased a lot of food to make soups and other freezable dinners that we can pull out when we have no energy to cook. While this does not account for the full overage this month, it did contribute and I would hope to see a major decline in this category in September as a result. My wife and I would both readily admit, however, that the rest of the overage is a result of poor menu planning on our part. We bought food items that were too expensive and didn’t plan to minimize food waste. It is an area that, when we do well, let’s us eat well on a smaller amount. However, we simply failed at that this month.
Auto and Transport: Spending – $411; Budget – $400
We were pretty close to budget in this category, with a couple unique things this month driving our total spending upwards. First, I had a wedding to go to in Boston, and decided to use the limited free time I had to see other friends. Instead of being able to catch rides with other wedding guests, I took a couple extra Uber trips to maximize my time there. My Zipcar renewal also came up this month, which is a yearly fee of $70.
Personal Account: Spending – $403; Budget – $550
In Managing Our Finances as a Couple, I talk about how my wife and I each carry a separate credit and spending account for items just for ourselves. Together, our budgets add up to $550, but we only spent $403. I have no complaints about this category, and hope we continue to keep our spending under budget.
Entertainment: Spending – $383; Budget – $300
The bulk of the overage in this category is a reward to ourselves for being so under-budget during the earlier half of the year. We treated ourselves to a nice restaurant that we had been wanting to go try, which accounted for about 70% of our spending. While we were over-budget for the month, we are significantly under-budget in this category for the year. I feel that it’s important to reward your successes every once in a while.
Travel: Spending – $318; Budget – $417
In preparation for the holiday season, I purchased a couple of tickets for our travel around Christmas. This is a category I don’t put too much emphasis on the monthly spending as it can be so volatile throughout the year. But if we are able to plan our travel expenses to spend a little each month, they become much easier to plan for financially. For the year, we are well under budget going into the most expensive travel time of the year for us, so I’m happy with our position here.
Bills and Utilities: Spending – $310; Budget – $200
While our monthly recurring expenses are well under our $200 budget, we do have expenses that come up a couple times per year that cover the whole year. This month, our renters insurance for the year came due, pushing our spending well above our monthly budget. However, we plan for this and had money saved in our bills and utilities budget to cover it.
Other: Spending – $312; Budget $100+
Our last categories included spending on gifts and donations (to cover our monthly giving, a wedding gift, and a birthday gift for my sister-in-law), some health-related expenses, and other miscellaneous. We try to keep our miscellaneous expenses to a minimum, and most months they’re $0. However, one-off things like birthday gifts and baby-related health expenses are harder to budget for accurately. Therefore we just group them into an “Other” category and try to keep them to a minimum.
There was a lot happening this month, with very little I expect to happen month after month. While I was not happy with our financial performance in August, and we need to pay more attention over the next couple of months to make sure we don’t fall into bad habits, I am willing to write this month off and think positively about the months ahead. Here’s hoping September shows better results than August did, or else Mrs. NFF and I are going to have to talk long-and-hard about our post-baby spending habits.