A year ago, my husband got a new job along with a raise in salary. Nice, right? And yet, here we are a year later with hardly any increase in our savings rate.
How did that happen? When we talked about our numbers, we both felt we were being pretty careful financially – we’re not big spenders. We sat down together a few times for financial meetings to go over the numbers, and seemingly the only answer was that our expenses had gone up. It wasn’t until this week that I could finally answer that question more definitively.
Why this week? The first year we were married, my husband was responsible for the finances. I took over the next seventeen years. And then for the next twelve years, my husband has been at the helm. This week I took responsibility for the finances once again, something my husband really doesn’t like but I actually enjoy a lot. (As to why he did it for so long if he didn’t like it, that’s another question, but it was a purposeful decision on both of our parts and we’ve agreed our goal was reached.)
Taking over again is a bit overwhelming because I’m looking at a different system than my own, and I have to wade through a lot of numbers to figure out what’s going on, what money we have coming in and what’s going out, in order to get clarity in my own mind.
Here’s what’s become clear so far: we’ve allowed lifestyle creep to sneak in. For years we were really, really frugal and careful about all of our expenses. We had to be, as our income was on the lower side (my husband’s friends who had similar incomes as well as a spouse’s second income were all in debt) and it was only by very careful and conscious management that we had any possibility to accrue some savings.
As our financial situation improved, we got a little more relaxed, and then a little more relaxed….we stopped paying attention to all the little expenses because the bills were getting paid without it.
And we began to spend a little more money here, a little more money there – nothing major or budget busting that we could point to as to where all the potentially savable money was going.
Now I’m back in the hot seat. The first couple of nights I sat for hours, going through details of months of expenses, trying to get a clear sense of where our money goes. I felt like giving up because it was so frustrating to me. But I stuck with it, and after a couple more nights looking at printouts, am excited and energized to be our financial money manager again. I’m looking forward to seeing how much money we can save and funnel into savings.
That’s going to mean becoming more conscious again about expenses, assessing the value of where we spend money rather than just spending it when it seems necessary. I’m going to be carefully tracking all of our spending – neither of us has been tracking our cash expenditures at all, and all the itemized expenses have to be gone through regularly – and plugging the many small leaks that our budget has sprung. There’s no one big item to point to – yes, prices have gone up, but even more than that, what I’m seeing is a general increase in expenses due to lack of attention.
I’m recognizing lifestyle creep and taking steps to counter it. This is a very hopeful and empowered place to be, and I’ll be sharing about different things I’m doing and how it’s working out for us.
Avivah
I would love hearing how you build your budget, set your financial goals and track your expenses. I know lots of different ways exist, and I’ve read and tried several, but somehow when you write about something it gives me a certain clarity that I don’t get elsewhere.
I have a general question about this topic. It’s something I’ve thought about at other times.
Having the ability to be a little less strict in a budget, a little more loose and free in day to day spending – the way you describe in this post – but at the same time obviously making ends meet, paying bills, and putting some aside to save – gives a certain peace of mind. Gives me some mental space and freedom. So there’s pros to having some “lifestyle creep” if you can afford it.
Somehow my response that I wrote yesterday to you disappeared, Kaila!
There’s a certain amount of relief when you don’t have to track every single penny, when you can be more relaxed about your spending. I appreciate that very much. I had passed that point, though.
Everyone has to determine how much relaxing is beneficial and how much will detract from your bigger and more important goals. For me, the extra relaxation was no longer enjoyable because it was too much, it was causing me stress because we weren’t saving money when I knew we could.
I have a very hard time sticking to a rigid budget. Unexpected things always seem to come up… our central AC needed fixing in the summer, car fixings, kid school trips, dental emergency, etc. And now kids chugim… each chug is at least 500 nis…
It would’ve been more managable if these things did not all arise in the same month!
Also I have a hard time finding the patience and free time with checking foods like rice and legumes, so I purchase vaccum sealed which is twice the price. Basically, time is money.
Would love to hear quick and easy ideas to save a few hundred nis a month.
You’re right, there are always expenses that come up that you’re not expecting! And the beginning of the school year is filled with big expenses!
Some things are predictable, though, and that means you can plan around it. Kids chugim, for example. You’re always going to have a bunch of them at the beginning of the school year, right? Holiday expenses, kids clothing – they come up in big chunks but you know they’re going to happen. So you can estimate how much you spend on those categories, and each month put aside 1/12 of that, so that when those expenses come up, you have the money ready.
Car and home repairs – it’s helpful to assume that you’re going to have something come up, and to regularly put something aside for that.
As you can see, there’s a good bit of thinking ahead and projecting, then planning around those projections. You can’t predict everything – my son was in a bike accident last year and broke ten teeth, necessitating a huge amount of serious dental work. Thankfully we hadn’t yet cancelled the supplemental insurance on him since it would have been close to 50,000 shekels without the insurance (almost 10,000 with insurance so still a big sum). I’ll try to elaborate more on these ideas in a post.
I get that we should be putting away 1/12th a month… I just do not know how to set aside 800+ nis a month for all the unexpected and unexpected things that come up throughout the year.
I’m thinking about how to respond to this in a post of its own but haven’t yet determined how to keep the length of the post manageable.