We find it fascinating to learn what other families spend in a year, so we’re sharing what it costs our families of 4 and 5 to live for a whole year. If you’ve ever wondered what we spent in an entire year, well now you’ll know! We dig into why and how we track our expenses, what it costs our families to live for a whole year and reflections on a year’s worth of expenses.
Why we track our expenses:
- One of the most important financial metrics every person or family should know is what it costs them to live for a year, even if it fluctuates year to year. This is one of the most important numbers you need to know for early retirement or general financial planning.
- The best way to reduce your expenses is to know where your money is going. Then, what gets measured gets better.
How we track our family’s expenses:
- Mike and Britta manually track their expenses by keeping receipts and logging them into an excel sheet.
- Maggie and Greg leverage Mint to track all expenses. They track expenses in Mint, categorize them, and then download and summarize them in excel every 3-6 months.
- We worry less about the how and more about making sure we have a handle on what we’re spending as a family. Some people prefer apps such as YNAB (you need a budget), though we prefer a free approach vs. paying for an app or service.
Before we review things in detail, some additional context:
- These numbers do not capture any of our income; they are focused on our expenses. This does not include any rental business expenses or child support for Maggie and Greg.
- We have also both paid off our mortgages, and ironically we did it through a lower cost of living, and now it’s even further reduced our cost of living. It’s the compound power of spending less!
Full-year review of our families spending levels:
- We each share our total expenses and top categories of spending.
- In addition, we each share the top things we feel good about and areas where we’d like to improve in 2022.
Top 3 takeaways:
- It’s an important investment in your finances and relationships to track and review expenses with your spouse.
- There’s no perfect way to do this. You can be as detailed or as high-level as you want to be. It’s called personal finance for a reason.
- It can be fun and helpful to review and discuss this with another family.
Show references:
- Friends on FIRE episode #109 - Talking to your partner about money
- Friends on FIRE episode #27 - Why Tracking Net Worth Matters
- Friends on FIRE episode #15 - Expense Tracking Gone Wild
- Net worth tracking spreadsheet
- Expense tracking spreadsheet
- Friends on FIRE episode #117 - The ultimate paper-free way to control your financial life
- Friends on FIRE episode #060 - Budgeting vs. Tracking Expenses
---
Follow friends on FIRE
Leave us a voicemail or text us: 404-981-3370
eMail us at: friendsonfiremm@gmail.com
Visit our website: www.friendsonfire.org
---
Other Links
Maggie’s Blog: Mostly Minimal Life
Mike’s Book: Your New Relationship with Money