[Hey y’all! I found out that one of my favorite podcasters has been tracking ALL of his expenses for over 6 years now, and asked him if he’d give us an inside look at them. You know, cuz we’re nerds like that ;) Apparently he’s never looked at the overall picture before, so we’re the first people to see what’s hiding in the numbers! Enjoy!]
In January 2010, I was wrapping up my last few classes of my MBA at Pepperdine University in beautiful Malibu, CA. One of my first assignments in the new year was simple:
Track all of my income and expenses for one week and write about the experience.
The only rule: to track every single penny in and out of my life, whether it was spending thousands on a car or finding a quarter on the street.
This was right up my alley – as a data-obsessed Excel nerd and Myers-Briggs type ISTP, also known as “The Craftsman,” I quickly built a spreadsheet to help me track it all, complete with pivot tables to summarize the data by date and category (read through to the end to get the Excel template).
Over six and a half years and 7,500 rows later, my spreadsheet is alive and well, still summing up my income and expenses into pretty charts.
While I watch my overall financial health every month and year and break it apart by category during tax season, I’ve never sat down and looked at the key takeaways — that is, until J. Money asked me to.
Today, I’m going to do something I’ve never done: I’m going make my expenses public and share 7 surprises of this experiment:
Surprise #1 — Living with Roommates Didn’t Save Me a Ton
In the last 6 years, I’ve lived in 6 different places in Southern California and in 4 different roommate scenarios. I went from a “Seinfeld” phase (living alone in a 1 bedroom apartment in Santa Monica, CA) to a “New Girl” or “Golden Girls” phase when I had 3 roommates at a house in West Hollywood, CA, and everything in between.
Yes, the rent & utilities were significantly cheaper in the latter ($13,500 vs. $17,700 living alone), but living with roommates brings in additional expenses:
- Cleaning was difficult, so we got a housekeeper (-$650/year)
- My groceries went up because not everything gets split perfectly and food & supplies might “go missing” (-$250/year)
- Restaurant expenses increased because I was around more friends and acquaintances and was pressured to go out with them (-$750/year)
- I spent a lot more on “gifts” (-$500/year)
Adding those factors in, I was still saving $2,000/year on rent, but that only equates to $166/month, which I probably could’ve negotiated when I lived alone, or found a comparable apartment for that much less. Also, I wasn’t sharing a kitchen, family room space, and parking—instead, when I was living alone, I used every square inch of my apartment and lived on my own terms.
If you’re deciding to live with roommates, these are things to consider. Is it worth it to save $100-200 on rent to deal with the complexities of having one or more roommates? For many people, like me, that extra cost makes sense… or maybe you’re an extrovert and simply love having people around.
Surprise #2 — Having a Significant Other Has Been Expensive For Me
How does your relationship status affect your finances? Here’s how it affected mine.
When I was single, I spent somewhere around $1,000/year on gifts, but once I was in a relationship this more than tripled! It didn’t mean I was spending a lot more on my girlfriend, necessarily, but when you’re a couple, you get invited to all sorts of engagement parties, weddings, birthdays, baby showers, and more, and you’ll likely be chipping in for the gifts as well. Add in gifts for your significant other and his or her family, and it’s easy to see that you’ll be spending much more than normal.
But that’s not all. While your groceries and restaurant expenses could stay the same if everything is split evenly, you’ll likely attend more events as a couple, so it’s safe to assume that expenses will go up in multiple ways.
For me, the gifts category was the most noticeable: I spent a whopping $3,600 in gifts in 2015 compared to $765 in 2010. While a good portion of the gifts went to family, I dove in to the line level and found that this was indeed mostly due to the change in relationship status.
Surprise #3 — Cat Ownership Isn’t as Expensive as I Thought
This clearly depends on your parenting preferences, but luckily, I’ve done it both ways:
In 2014, I was very relaxed with my cat—maybe 1 vet appointment, she was fed dry kibble, and she didn’t need a litter box because she went outside. She was also old enough that she didn’t need toys and distractions. Cat-related expenses were very minimal.
Cat bills in 2014: $312
Compare that with the very next year, when I took a more proactive approach: I fed her high-quality, raw cat food and had a couple of her broken teeth extracted by the vet’s recommendation.
Cat bills in 2015: $1,375
That’s a $1,000 difference, but even in the more expensive case, $115/month, or less than $4 a day, to give my cat the best and have a furry friend around was worth it for me.
Surprise #4 — “Gold” or “Platinum” Health Insurance Hasn’t Been Worth It
Being self-employed is expensive. It feels much worse than receiving a paycheck from a company because I have to pay quarterly taxes on my income, which is about a third of my earnings. On top of that, I have to pay for my own health insurance.
As a hypochondriac, I opted for the “Gold” plan, thinking that it would be better long-term. But just 3 years after quitting my steady job, I’m worth $8,800 less due to monthly health insurance costs, and to add insult to injury, I’ve only used my “awesome” gold plan a couple of times.
Average cost per year: $3,500, or roughly 10% of my total expenses
Surprise #5 — Tax Season is Not Only a Breeze, But Also Fun!
I don’t think you’ll hear this anywhere else… Ignoring quarterly taxes, I enjoy tax season. This is what it consists of:
- Sort my spreadsheet by date and category
- Eliminate the categories that aren’t applicable
- Send it to my accountant
Done. This whole process takes a few minutes and it’s fun to see the year as a whole.
Surprise #6 — Despite the Odds of Winning, Playing the Lottery Makes Sense (to Me)
Everyone has their opinion on this, and mine is somewhere in the middle. I only play the lottery if the expected return is greater than the cost of the ticket.
Basic math shows that your odds of winning the lottery, or at least matching all the numbers, are horrific. But basic math also shows that when the lottery reaches certain thresholds, your expected return is actually really good when you take into account the smaller prizes. On top of that, the law of utility makes a great case: even if you played $1 on the lottery twice a week, you’d only be spending around $100/year.
Is that going to ruin your finances? Probably not if you’re reading this article. However, if you won, would it affect your life? Most definitely… and that’s why I play. The lottery also gives back to schools which I like.
As for the numbers, I’ve spent less than $400 in 6 years on the lottery and won back 10%. Is $1 a week worth a chance to win $100,000,000 or even $1,000,000,000? For me it is.
Surprise #7 — The Juicy Details Aren’t Really That Juicy
The numbers are fun and tracking finances to this level of detail makes tax season enjoyable, but to me, the biggest impact of this experiment has been my attitude.
Just one week of tracking every penny in and out of my life was enlightening, but maybe not in the way you’d expect. I thought I’d find insights about the actual data and where I could save money, and while that was somewhat true, the bigger lesson was one of awareness.
Every time I spent any amount of money, I was thinking about my new spreadsheet: the fact I’d have to spend time updating my table for this trivial purchase, what it would mean to my balance, and if this expense was actually “worth it.” This simple homework assignment threw me out of “auto-consumption” mode and made me question every purchase I made. It’s like a meditative practice for minimalists.
After 6 years of doing this, that awareness is stronger than ever. I know what I can afford. I know what it’ll mean if I make a large purchase or if I take on a new monthly expense. It’s easy to see how this will impact my bottom line and my future finances.
My Challenge For You (And The Downloadable Template!)
This jolt of mindfulness and awareness is the reason I ask listeners of my podcast to go through this challenge. Track every penny in and out of your life – just for a week. Try it. There’s no harm.
If you struggle and fail, no worries; but if you succeed and you can keep doing it for a month, a year, or more, your awareness will continue to improve and you’ll know exactly what you spend & make and more importantly, what you can afford to spend or make.
Does it make sense to move? Can I afford to quit my job to start a business?
These questions are easy to answer when all the numbers are nicely summed up by category. Best of all, it only takes a couple of minutes a day to log your receipts if you stick with it.
While I only give away my spreadsheet template to listeners of my podcast, I’ve made it available to Budgets Are Sexy readers today. Grab the spreadsheet here, complete with macros (Excel automation) that I hand-coded myself, and watch the video tutorial here.
Snapshot of All My Numbers
Let’s face it… this is probably why you’re still reading this article. You want to see my actual numbers and compare it to your own numbers, whether they’re in your head, on Mint (or YNAB or EveryDollar), or in a spreadsheet.
Well, alright, but all I ask is that you don’t judge me. I’m open to advice and constructive criticism, but let’s keep this positive. I’m not putting all this financial information up just to be torn down. :)
Feel free to look over my numbers and share your ideas for improvement, your own experience tracking your income & expenses, and any other relevant commentary. I’ll be here, stalking the comments.
By the way, I’ve taken out yearly expenses that were less than $100 (like the lottery expense or my incredibly cheap haircuts) and more rarely, stuff that I didn’t think would add value to this conversation (like accountant fees, driver’s license renewal, etc.), just to keep this as clean and relevant as possible.
Now that that’s out of the way, enjoy this window into my personal life!
Justin Malik is a serial entrepreneur who launched a podcast as a social experiment to help come to terms with performance-based social anxiety. In his podcast, Optimal Living Daily, he reads to you from the best blogs he can find, covering personal finance, personal development, minimalism, and more (with author permission of course). Bloggers read on his show, and his spin-off podcast, Optimal Finance Daily, include J. Money himself of BudgetsAreSexy.com, IWillTeachYouToBeRich.com, MrMoneyMustache.com, TheMinimalists.com, Sivers.org, MarcAndAngel.com, and many more. Learn more at OLDPodcast.com.
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!