You may know already: we generally advocate simplicity in most things. Once our basic needs are met, we’ve got some choices to make. So how do we keep things simple?
When it comes to budgeting, this takes the form of “paying yourself first.” You save and invest to meet your goals, and then spend the rest as you see fit. No need to track every nickel; you will get where you want to go so long as you’re getting yourself paid.
But it doesn’t hurt to also review your outlays in greater detail once in a while. Fixed expenses are those that cannot be changed in the short run: if you don’t pay the electric bill, the company will shut off your power. You have to pay the bills. Total up these kinds of items. You’ll need to know what sort of fixed expenses you can expect each month in order to figure out how much is discretionary—what’s left over for the things you want?
This exercise can be useful because it may point you to those expenses that are regular but are not fixed. For some, it might be a gym membership that doesn’t get used. It might be a streaming subscription for shows you don’t watch anymore. These services are just a few examples: there are plenty of things in life that we try out or that once made sense but no longer serve us.
And when we root these things out, it’s like giving yourself a raise!
We each have long-standing habits or hobbies whose costs we may not have considered for quite some time. Taking a fresh look at our spending gives us a chance to make intentional choices about how we live, going forward:
- What are you not doing that you wish you were doing?
- What do you wish you had that you do not have? A few more adventures, a new skill or pastime, something for the house or the yard?
- Where might your money save you some time?
And the big question: what would you have to change in order to afford that new choice?
This isn’t necessarily “just” a budgeting question, because rather than shift your spending around, you might elect to invest more each month. All else being equal, investing more means you reach financial independence sooner. Access to options: that’s what we’re buying when we pay ourselves first.
We don’t mean to make any of this prescriptive. After all, you are the one who must live your life—not us! We just suggest that taking a step back to look at where our money goes, being intentional about how we spend, these are things that come naturally when we try to live life on purpose.
Clients, if you would like to talk about this or anything else, please email us or call.
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