Were you all waiting with baited breath for my annual finance/spending post? Admittedly, this is a topic I really enjoy digging into but I recognize is is likely boring for some! I love reading others spending posts and by sharing our spending, I'm trying to destigmatize the tendency to NOT talk about money. It does put you in a vulnerable position to share how you spend money, but I still like talking about it!
First off, some disclaimers:
1. The chart doesn't include contributions to investment accounts like our 401ks, the boys' 529s, our brokerage account, etc. This year I also excluded any equity we purchased in Phil's firm. That is part of his compensation package - he buys equity and then receives dividends. But it feels similar to investing in a retirement account so I left it out this year.
2. Our housing category is smaller than the typical household but this is because we made the (controversial) decision to pay off our mortgage in 2020. There are a variety of reasons for this, but we didn't sacrifice investing in order to pay off our mortgage. We loved the feeling of having no debt when we paid off our last house so decided to do it again. We especially like having no debt since Phil and I work in the same industry (asset management) which is very volatile. The likelihood of one or both of us losing our jobs at some point is pretty significant. I mean, it's already happened to both of us. I took a forced relocation in Charlotte in 2013 because I did not have the savings to roll the dice on finding another job in Minneapolis, and Phil was let go when he worked for a hedge fund that blew up during the financial crisis. So we feel a great sense of comfort in having no mortgage payment. It's a personal decision and I completely recognize our privilege in being able to do this, although we have definitely lived frugally/below our means so that we can do things like pay off a mortgage.
3. This does not include any spending on healthcare costs (neither our deductibles nor out-of-pocket expenses). I pay for everything with my HSA card and luckily have a large enough balance to cover those out-of-pocket expenses (which are not insignificant. We nearly always meet our out-of-pocket maximum).
So here goes! This is going to be a lengthy post, so buckle up!!
Overall - our spending increased last year, nearly all due to the daycare line item as we only paid for about 8.5 months of daycare for Will last year since I was on maternity leave until mid-April. Overall, I'm ok with the total amount we spend, especially when I compare it to our take-home pay.
Kids (43%) - Unsurprisingly, kids is the biggest expense category. 99% of this is daycare. Daycare is EXPENSIVE! But - they earn every penny and I do feel like our daycare treats their employees well in terms of time off, benefits, etc. This expense will go down next year when Paul starts kindergarten although he'll still need before and after care since the school day is something like 8-2:30. Plus as Will moves into the preschool rooms, tuition will go down as the teacher/student ratio increases. I don't even focus on this expensive item because it is completely essential with us both working demanding, full-time jobs. Phil forecasts the future expense within our quarterly financial review spreadsheet but I just breeze past it because it's not optional!
Donations (8%) - I am happy that this category increased in 2022. As part of our quarterly review process, we've talked more about how to give back. Our donations mostly go to our local United Way, our county library (which we are HUGE users of!) and another organization that benefited Phil's late brother.
Home (7%) - Since we don't have a mortgage payment, this category includes taxes and insurance as well as home projects. In 2022, we paid the 2nd half of the expense of converting our wood-burning fireplace into gas (best money spent - I use it so much!) and we also replaced our front door.
Groceries (6%) - This stayed about the same as last year, percentage-wise, but our total spending increased since our daycare spending increased (we only paid for 8 months of daycare in 2021 since I was on maternity leave until mid-April). So overall, the dollars spent increased but not by a ridiculously amount. Buying so much at Aldi has definitely kept our grocery spending from increasing too much!
Auto & Transport (6%) - This includes insurance on our 2 cars, gas, and our monthly parking contract (a steal at $99 since we pay a special carpool rate - we both work downtown and work the same schedules so can drive together).
Bills & Utilities (6%) - Nothing interesting here - it's all the typical bills and utilities and includes things like my cell phone plan (Phil's is paid for by his employer), heating, electricity, internet, etc. We do save money by not having cable. We've never had cable; instead we get by with Hulu and Amazon Prime, and we share a Netflix account with Phil's mom. We have an antennae that sits on our tv stand (it's this odd, flat squared-shaped thing so not the antennae you may be picturing in your head!) so we can watch local channels.
Travel (5%) - I'm thrilled that this increased from 2% last year to 5% this year! Woot woot! We went to Tucson in February to visit my little sister, although the flights were purchase in 2020, and Phil and I went to Mexico in December.
Target (5%) - Our Target spending increased last year and that is definitely related to the fact that I'm back in the office. There is a Target 1 block from work so I go there about weekly. We spent way less at Amazon, though, which I am happy about. I'd rather support Target, which is a local company, than Amazon!
Gifts (4%) - This was a heftier line items in 2022, but that's because I wrote my Godson/nephew a nice check for his high school graduation gift. I never gave him a single toy for birthdays and Christmas; instead, I would put money in his savings account and gave him books when he was younger. I was not the "fun" aunt, but I think he really appreciated my approach to gifts when he got a check from us for graduation!
Dining (4%) - Our dining out stayed the same, percentage-wise, but I definitely ate out way more in 2022 thanks to book club returning to in-person meals in the spring! We didn't physically eat in a restaurant until February of 2022 as we were very, very careful during the pandemic. Since we went from not eating out besides Phil's lunches, to me eating out once/month, I would have expected this category to increase as a % of our spending. But it turns out we spent less on alcohol and at coffee shops in 2022. Our total spending on alcohol isn't much in general, but in 2022 I bought wine through a membership program called first leaf several times and then stopped the membership after the first month (the first month is an extremely good deal - I would pay $6.25/bottle!!). And in general we bought less wine in 2022 as I decided to only drink wine when we had people over, when we were going to someone’s house or when I went out to eat. Previously I would have some wine every weekend.
I'm kind of shocked my coffee shop spending decreased! I typically get one coffee/week and drink coffee made at home all other days. But there are weeks I talk myself into getting an extra coffee out but I also received a lot of gift cards last Christmas so that likely had an impact on my out-of-pocket spending on coffee!
I suspect that the money we spent on dining out is still pretty low overall in comparison to the average family. But even before having kids we did not eat out all that often. Phil buys lunch when he's in the office 4-5 days/week, we get take-and-bake pizza 1-2 times/month, and I have my monthly book clubs where I order/eat with abandon! Ha! But that's typically it for dining out. I would like to return to quarterly dinners out with Phil so this category should increase a bit in 2023, but not substantially.
The rest - The remaining categories are too small to warrant much of a deep dive. As I said above in my Target section, I'm glad our Amazon spending declined. I'm trying to buy less from Amazon although there is a huge convenience factor that I enjoy during these little kid years. Having a huge thing of diapers or pull-ups show up at the door is pretty priceless. Subscriptions include the various Patreon communities I am a member of - I support Best of Both Worlds, Current Reading, From the Front Porch, and Sarah's Bookshelves Live. I love that there is a way for me to support these hard-working podcasters and the extra benefits I receive are well worth the money spent! Personal care is haircut/color - which only happened twice last year, despite the fact that I'm really graying along my hairline!
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Overall, I feel good about our 2022 spending. I hope the travel category increases as our kids get older but we have opted to not travel much in the little kids years of life. I think we are very thoughtful and intentional about how we are spending our money but I try not to obsess over it too much. I want us to be prepared for a time when we experience an employment interruption, but I also want to enjoy the fruits of our labor. We are frugal by nature, but I do think we are striking that balance!
Do you review your spending on a regular basis? Are there any finance posts you'd want me to write this year?
