Do You Know What Your Life Costs?


Note: I’ve decided to not completely disclose our finances here. So I’ve included percentages instead of £ or $. You’ll still have an idea of how we spend and save but it gives my family some privacy.

The summer of 2005 was my ‘summer of dating.’ I was finally single and living in a big city and not training 18 times a week. There were no long distance or lifestyle barriers to looking for a mate.

It ended up being my last stint of dating because I met my future husband that August. But before him I met a lot of interesting men. Interesting but not a love match.

One man that I went on a handful of dates with confessed on our first meeting that he tracked every penny he spent. That he could tell me at that moment exactly how much money was in his wallet and checking account.

Bizarre, I thought, but smiled and said, good for you. This guy’s financial savvy and intensity was un-chic to me. If I can be honest it wasn’t that I found it extremely nerdy to know exactly how much money you had, it was that it made me think about how out of touch I was with my own finances.

I had student loans and credit cards and couldn’t tell you how much was on either of them or what the interest rate was. I could give a guess at what I spent on groceries and dining out each month but it would just be a guess. At that point in my life I was earning and spending and just hoping it all evened out in the end.

A Year of Tracking Our Finances

Of course, now I know exactly what we spend. I know how much groceries ran us every month for the last year. I know what those small coffees out or a lunch on the run cost us.

I’d been taking stabs at tracking spending since February of 2010, using spreadsheets and different apps, but it never really clicked. One of the reasons it wasn’t working was that I was doing it alone. My husband wasn’t on board with tracking until we moved overseas a year ago in May of 2011. With a predictable income he was ready to star tracking what we spent so he found a spending app that we could both use. For the record we use Smart Budget and you can read my review of it here.

What We Spent in the Last Year

Our tracking tool isn’t perfect.

And our use of it could be a lot better.

For instance, we put a lot of things under Miscellaneous. A lot. Things like passport application fees and the 20p it costs to use the toilet near the park we frequent. We’ve also used it to track money we wired back to Canada. I’d like to get a better idea of where that money is going so I’ll be adding a few new categories to our budgeting app.
Miscellaneous – 36.2% Money wired home (majority – 20%), random expenses and purchases.

Accommodation – 24.4% Includes rent, utilities and some random items like buying a vacuum when we moved.

Food 10.8%

Child 4.8% Includes part-time nursery/daycare fees, classes, drop-in fees and any clothing or toys.

Travel 6.2 %

Dining Out 4.2 %

Casual Spending 3.2 % Coffee, movies, rides at the fair, etc.

Public Transport 1.4%

Health/Gym 1.3%

Chris’s Work Lunches: 0.9%

Grooming 1% Hair cuts, eyebrow wax and tint, husband occasionally gets a goatee trim.

Clothing 1%

Dry Cleaning .7 %

Gifts .4 %

Mobile Phones .4 %

Charity .1 % This is random contributions. Our main charity contribution will be in the fall and we set aside money every month for it.

What We Saved in the Last Year

We have two focuses right now: our mortgage in Canada and building our emergency fund.

Our emergency fund is now at six months of low cost living in Canada (as in we live with family while continuing to rent out our property there). One of the reasons we will need a considerable amount of cash is the mortgage/rental income short fall talked about below. I think our goal is to double our emergency fund which we should accomplish in three years if we continue to put 5% of our annual income towards it.

We’re throwing everything else at our mortgage. We renegotiated a lower interest rate back in November and increased our payments by 15%. The shortfall between what our rental income and mortgage, strata fees and property tax is considerable (one of the reasons we are building a bigger emergency fund). We just made our first extra payment on the mortgage and are hoping to do a few more this year.

The other two areas of saving are our son’s education fund and our charity fund. We upped both of those contributions in the spring when my husband received a raise.

Here’s a breakdown of how we have split out our savings in the last year:

Emergency Fund: 70%

General Savings: 14% This account fluctuates based on contributions to our emergency fund and sending money back to Canada.

Education Fund: 10.5%

Charity Fund: 5.5% We will probably spend/gift this money out in the fall.

Confession: it would take too much time for me to breakdown what we have put on our mortgage and how much we have sent back to cover our short fall. It’s considerable.

Our other life expenses.

The other thing we haven’t been tracking very well is our financial life in Canada. We don’t have a UK credit card but we do have a Canadian one. Occasionally we will have expenses from our life here, hello iTunes, that go on our Canadian card.

It’s all quite confusing and I’d like to put some better systems in place so we have a grasp on our expenses at home. Right now we have recurring expenses like our life insurance policy that just get rolled into costs when we send money back for the mortgage shortfall.

The other interesting piece is that Chris and I have sporadic income that goes into our Canadian account. This income helps with the mortgage shortfall (yeah!) but we pay taxes on that income here in the Isle of Man. So some months we squirrel away money from our general living funds into an account for Isle of Man taxes.

It pays to know what you spend.

When I think back to the date that tracked all of his expenses I now see that it was neither geeky or obsessive. He knew what he spent and what he earned but it didn’t stop him from enjoying his life. I remember he told me that at one point he consciously decided to go into a bit of debt so that he could do a big trip he had been planning for years. He knew he could return to his job and be out of debt a few months later.

We’ve really enjoyed living in the Isle of Man in the last year. Some of it we may have enjoyed too much. Our dining out spending surprises me. Mostly because we don’t eat out that much. But restaurants here are expensive. For example we were out for a friend’s birthday with a few couples the other week. The restaurant was very nice but not white glove service. I ordered the Nasi Goreng and it was £15/$22. Ouch. In a similar restaurant in Canada it would have been £8/$12.

Our other big expense is travel. We bought tickets for the Olympics a few months back, my husband went on a solo trip to Dublin in May and recently to Manchester and I’m meeting my sister in Glasgow for a weekend soon. All of this has been within our generous travel savings but that savings account is at zero right now. We’ll have to reign it in if we want to save for a fall trip.

We’re thinking of cutting way back on travel in 2013 and just doing a trip back to Canada and a visit to Liverpool once or twice.

It’s not just because we could use that money elsewhere. We also want to sharpen our skills for living on less money. We want to easily be able to give up our luxuries – travel, dining out – when we need to.

Any other budget and spending geeks out there? Do you do an annual review of your spending?

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  • It’s not geeky at all – it makes sense to know where your money’s going. In 2010 I tracked every single cent I spent. It was fascinating at the end of the year to see how much money was spent on little things like sushi and coffee…! I haven’t done it since then because my husband has no interest in it. Because we spend far less than we earn he doesn’t see the point. I think it’s beneficial for anyone to do and it helps make better decisions.

    • It’s been a great learning tool for us. As reformed ‘spend will-nilly whatever you like and more debt than we know’ people I could see us tracking forever. If we hit some point where we were living off of less than 50% of our income… maybe then we would drop it. For now I think we are living off of about 60% and we have a HUGE mortgage to pay down so it helps us stay on track.

  • It’s the same for me as Kate – my husband doesn’t really see the point as we spend so much less than we earn at this point. I do track our grocery spending as it’s super easy – we have these bonus cards for two chains that we mostly use and get a slip each month saying how much we spent. In the summer time of course we buy things like strawberries and such from the market. I tracked everything to the penny for a few months and I find it interesting. I should do it again. I was doing it by hand but would prefer an application… “Your money or your life” was a really good book and I love the fact that we make more than we spend (well, my husband makes as I stay at home with our daughter) and that we can give more and save more, and have so much more freedom and options in the future.

  • I think your post shows how complicated it can be to track thus how easily we waste money when we don’t track. I am always amazed at where we waste money. And, it shows how taking the time to track expenses helps you accomplish much more.

  • I’m in a bit of a “holding” period right now with our house on the market and moving into a monthly rental, but I know my next step is to start tracking once we get a good idea of what our expenses will look like. Thanks for all the great info – I need a lot of hand holding in this department as my current attitude to budgeting is similar to yours in 2005. Also, I think you and your husband are very chic to include eyebrow wax and tint and the occasional goatee trim to your budget. Some wouldn’t, but I consider those essentials! : )

    • Look good, feel good, do good, right? :)
      Good luck on the move and sale. We threw budgeting out the window during our busy and expensive ‘about to move overseas’ period. There was a lot of take-out, Zip Car rentals and unexpected ‘get condo in shape for renters’ expenses. We just told ourselves we would do our best and when the dust settled we would get back to budgeting.
      My fingers are crossed for a quick sale an easy move. You’ll have an amazing summer up there!

  • I stalk to keep track of my spending. It’s not a perfect website, but it helps a lot. We are essentially a single income family (I earn a little bit here and there from blogging, but not much). My husband earns a rather modest income, and I think people would be shocked if they realized how little we have to work with compared to the lifestyle we live. We have to be very careful to make it work. I am not always as disciplined as I would like to be, but I always know where we’re at money-wise when I make any purchase, even a stupid one. I wasn’t always this way. It’s hard to believe now, but as a college student I had no clue how credit cards and interest rates really worked. I had several credit cards in my name to pay for books and other expenses, and my dad was supposed to pay the bill (I paid him back with my summer job). My attitude was “he has to pay this amount monthly no matter what, so what’s another $X.XX?” I didn’t keep track of anything. I was not ridiculous about my spending, but it took just a few times of him forgetting to pay, and I was at 28% interest on all of my cards and my credit score was shot. I inherited full responsibility for my thousands of debt once I graduated, and I learned the hard way!

    • I once got a credit card because my picture was on it (we were national champions the year before). Could there be a worse reason to sign up for a credit card? Of course, I said I wasn’t going to use it but I did. Gah. Terrible college financial decision #127.

  • I tried and didn’t like it. I think that it was just too much information at once. I’m using YNAB, and for the first time, I know….really really really know…where we are financially. Since I’m in the last month of working outside the home, getting a tighter grip on our money wasn’t just a good idea, it was essential to our continued survival! I decided for us to live on a budget in June and July that operated on the level of income that we will have once I stop working. I wanted to give myself a couple of months to get the hang of sticking to our lower levels of spending before we lost the “net” that could absorb overages. At the end of the first month, I have to say that we have done better than I expected. It’s just a matter of adjusting those categories that I wasn’t sure about before to more manageable numbers. Budgeting is a learned art!

    • I also tried something ‘fancy’ like and found it too much for me. Our budgeting app is really simple but it works for us. Our savings are automatically withdrawn each month and we give ourselves a set amount to live on each month. We like to know where we’re at as the month goes on, if we have money for extras like a night out with a babysitter or if we need to stay-in until payday.

  • Yup, total tracking geek here. I’m a bit behind right now though with a new baby, but generally I track every payday. I don’t want to drive myself mad though so I do use broad categories. For example, anything we buy at the grocery store goes under ‘household’ whether it’s food or kids’ clothes or gift wrap. I also don’t track our fun money or individual ‘allowances’. They’re supposed be guilt free categories so I try to keep them that way.
    To make up for these fuzzy patches and make sure w’re on track, I do a net worth statement every month. That’s a metric I love because I can’t get mired down in analyzing or rationalizing it. It’s a single number and it doesn’t lie.

  • I use Mint too and love it for its versatility and ability to track many different types of accounts. I feel it gives you a greater overall picture of your wealth/debt ratio. I also love the ability to budget amounts for each category and the subsequent nudges it gives you when you exceed your budget – i.e. “you’ve gone $20 over your entertainment/fast food/utilities budget”. I find those reminders help keep me on track and provide a gentle reminder of our goals. My husband and I are also small business owners and love that we can track business expenses (and income!) as well – whether they get paid for on one of our corporate cards or not.

  • Hi Rachel,

    I agree that tracking spending is really, really important. I would say the single-most important thing to do when you are trying to save money. If you don’t know where you stand, how can you change? My husband and I have been tracking spending on a paper chart since we got married, and we tally up the totals at the end of each year. (I created a daily spending form that is available on my website:

    We have 12 years of spending charts in our file cabinet — and we know we exactly how much our life costs, in all the places we have lived (because cost of living definitely makes a difference). And so does lifestyle creep, as you well know!

    Like some of the other readers, I like Mint for all the colorful charts that give us an idea of the big picture, but I find that keeping track of purchases is easier and more powerful when you physically write it down.

    Great post, Rachel!


  • I’m going to come across as a bit of a bore now … my husband and I have been religiously tracking our spending since we first moved in together about ten years ago. We have the world’s biggest spreadsheet and update it on a monthly basis. We know exactly what’s coming in and what’s going out, what we can afford, what we have to push back a month. Not once have we ever argued about money so I can only say that it has a really positive effect on our lives.

    • Not a bore. :) I’ve also found that tracking our spending has lead to better communication about finances. We always know where were at each month and if we can’t afford something out of our household budget we have to have a long discussion about if it warrants dipping into savings.

  • Same here – I have been using YNAB since the beginning of this year, so has my fiancé. And it does work for us. I feel really on top of it now. Eventually we’ll move it to one account for both. I’m not in debt, but he is still paying off a student’s loan.
    I’m in the middle of a decluttering process and so is he and it just feels great and freeing.
    I really love your blog, Rachel. It’s very down-to-earth and inspiring. Keep up the good work! Greetings from Germany.

  • I’ve been tracking money for a very long time. It started as a necessity when I was a single Mom working 2-3 part-time jobs to keep the oldest & I afloat while I got my degrees. By the time I got married it was second nature and continues even though we only need a little less than half of what my husband’s income after taxes. I still like to see how low I can get the bills while living a comfortable lifestyle.

  • For over 10 years, I tracked almost every penny. I didn’t track how we spent cash, but we had whittled down cash spending to next to nothing, so our total “miscellaneous” expenses including cash expenses were down to under 5%.

    But once I had kids, I stopped tracking consistently. I simply didn’t have the time. That said, I had the budgeting skills and financial oversight skills to be able to look at my financial statements and see where I was at. I still do budget and check generally to see how we are doing against that budget.

    At the moment, the biggest monthly line item (after taxes) is our kids’ school. We opted to buy a home for a very reasonable price and then fix it up instead of buying an expensive home. That means we only spend about 5% on our mortgage and about another 5% on utilities. That means that we are able to invest in our children’s education, which feels like a better way to spend money than on a large mortgage for us.

    • Hi Annie,

      Huge fan of your blog so I was thrilled to see you comment here.

      Interesting to read your choice on housing and that it has allowed you to provide your children with what I assume is a private education. We’ve decided to take a different route and purchased in a very central area. Vancouver and the surround suburbs are all very expensive so there wasn’t an option for us to buy cheaper and still have a non-commuting lifestyle.

      We’ve spent more money to get more time. We have a walking lifestyle and don’t spend a lot of time in a car. Actually we don’t spend anytime in a car!

      Of course, we moved overseas so renters are enjoying our downtown Vancouver condo.
      In our new town we chose a central location and pay a bit more rent than if we had chosen something farther out of town. My husband can walk to work and I can walk or take the bus into town. We live across from the beach. We don’t need a car which more than makes up for the savings we would see if we moved farther out of town.

      Our son isn’t school aged yet so we haven’t had to make a decision on spending on education. By all accounts the public schools here are quite good. We’re limited on private education options so it’s moot point really. The only private school is in another town so we would have to get a car or move there. I’m not that keen on the type of families the school attracts. I think we would reconsider private school if we moved back to Vancouver and were unhappy with the public school options.

      Spending 10% on mortgage and utilities does sound pretty good! We spend about 20% of net income on rent and utilities.

      Thanks for sharing, Annie. Good to hear how other families choose to spend their earnings.


      • There’s always homeschooling too. I started homeschooling our oldest 4 years ago when I was still teaching at the University. We plan to continue to homeschool him at the recommendation of his Neurologist, he has Tourettes Syndrome, ADHD & Aspergers Syndrome. The Neurologist said tics increase greatly during puberty and thought it would be best to continue homeschooling through then because kids can be so ruthless when it comes to those who are different. Anyway, homeschooling is always a third option.

  • Rachel, as a financial coach, it concerns me to see that you and your husband don’t seem to be saving for retirement or did I just miss that part? The day will likely come when you and hubby either do not want to or cannot work for money anymore. It would be good to have a nest egg to live off of if that day comes. If Canada provides good pensions for its citizens, then great. But in the US, you need to take care of yourself.

    • Hi Louise, We have some retirement savings in Canada but yes, our focus for the next 3-5 years is our mortgage and Emergency Fund. If we end up returning to Canada and not needing the Emergency Fund a good portion of it will get rolled into retirement.
      We’ve looked at the pros and cons of our current decision and are comfortable with our choice. It’s not forever. Eventually the dollars we are putting towards the mortgage and emergency fund will go to retirement savings. If things continue to go well for us we could have our mortgage paid off in 8 years and our emergency fund will be done in 3. In 5 years our mortgage comes up and we’ll decide if we want to renew for a longer amortization with much lower payments.

      • I must be missing something here as well, but my husband and I are big savers and we purposefully save for four major expenses: our child’s education, a down payment on a house, an emergency fund (which is now at capacity thankfully), AND retirement. I may have misunderstood, but your comment about “not needing an emergency fund” if you move back to Canada concerned me. Everyone needs an emergency fund.

        • Typo there. We won’t need as big an Emergency Fund if we move back and have jobs/income right away. So we would probably roll a good portion of our Emergency Fund into retirement savings.
          Our goal right now is for 12 months of low cost living with a bit extra for the cost of moving back. In a normal not overseas situation we would aim for six months of living expenses.

  • It’s not geeky, or if it is I’m geeky too! I’ve been taking a holiday from tracking my finances and I’m itching to get back into it. I had to comment though on the bit where you say you want to cut right back on your travel spending for the coming year. Yes I can see the point and it’s great to be able to cut back, but part of the joy of living in another place is being able to travel and experience the area. You’ve got all of Europe just there, way easier to get to than from Canada! I lived in London for 6 years and we’d try to get away for a weekend every month or so. At the time I was paying off some personal debt and I could have cut back on that and paid it off quicker, but I knew that this was my one oppurtunity to do the travelling. Now we’re back in Australia and I regret all the places we DIDN’T go to, not the money I spent on travelling.

    Your mileage may vary of course, I don’t know how long you’re planning to live there or if you’ve done all that travelling before. But while it’s good to be able to give up your luxuries when you have to, maybe you don’t need to give them ALL up if you don’t have to?

    • My husband and I are still discussing our 2013 travel plans but one of the perks to take a year off travel is that we could then save during that year for a bigger trip in 2014. We live on a little island in the Irish sea and it costs us a minimum of £350/$550 to get off the island and to a large airport with access outside the British Isles. In the last year we’ve taken some short trips with direct flights to places like Dublin, Edinburgh, London and Manchester. But we’d like to do a bigger European trip. Something like renting an RV for three weeks and driving through France, Switzerland, Belgium, etc.

      We do love our travel. I saw quite a bit of Europe as an athlete in my 20’s and then my husband and I did a few trips before we had our son: England, Scotland, Italy, France, Morocco.

  • Well you know I track every penny lol. I started a spending diary as soon as I started to pay off my debt (2005), and have kept one since. If I don’t track then money disappears far too easily!

    Like you ,we’re learning to live on less to achieve financial freedom. The ultimate prize of a budgeting nerd :)

  • My husband and I have always spent less than we earned and tucked money into various savings monthly. We have used various tracking tools in the past 21 years, and I can tell you approximately what percent of our income went to what category or the range of what we spent on groceries. But the wasted amounts were not so clear to me until we started prepping for a move overseas. The number of doodads we own…. Gah! I can’t believe how much $$ was spent on junk. So what if we spent less than we earned… we really could have been spending less and saving MORE. We are going to be far more diligent about where our “play” money is spent from here on out.

  • My husband and I have been tracking using Sage Simply Accounting for a year and a half. The software is really robust (we already owned is for business use) and we don’t use a lot of its functions, but it makes it really easy to track at a very specific level… We have several dozen different categories of spending and income, so for the most part we avoid the not-so-helpful “misc” designation. It also tracks our various credit cards, loans, bank accounts, and mortgages. Pretty awesome. The key for me has been to stay on top of entering receipts and not letting them pile up. It’s useful to be able to see the exact amounts we spend on stuff, and as you say, a reality check for what certain things really add up to. Now that we’re in the habit of doing it, I can’t see going back to our old ways!

  • Weirdly, my financies became much less stressful when I stopped tracking every penny. For around 3 years, I kept spreadsheets of how much we spent in each category. I was always over-spending and stressing out about it. Instead, we started Dave Ramsey’s cash envelope system and I stopped tracking. When the money in the envelope is gone, I either have to consciously move money from another envelope (which I’m trying to keep track of for future budget planning) or stop spending from that envelope. I use the sheets from his book to determine how much each envelope gets so I have an idea how much I spent, but it’s not an exact to-the-cent amount. It’s pretty freeing for me.

  • So happy to have found your blog! I’m dealing with the same thoughts at the moment…really feeling the need to declutter…I feel like it makes space in the home as well as the mind, making room for newer, fresh experiences. Looking forward to reading more :)

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