[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]
On Friday, February 1, 2019, my wife and I had our monthly date night. I made reservations for us at a new restaurant that had been recommended to us many times for their excellent atmosphere and food. I left work to pick my wife up from our home and she looked absolutely beautiful. We got to the restaurant, sat at our table, and then it began. See, this wasn’t an ordinary date and the conversation may not have been what you were expecting.
The purpose of the evening was to hold our monthly household expenditure review. Yup, that’s right. We were out enjoying each other’s company and discussing where every single dollar was spent for the previous month. And this discussion happens every single month.
We feel this date night is important on multiple levels. The first is obvious, we need to be open and honest with each other about our spending. I need to own up to my frivolous addiction to Diet Coke. Secondly, it allows us to have a conversation without all of life’s distractions. It’s a couple hours of just us talking. No kids interrupting us every two minutes plus we put our phones away with the exception for taking pictures of our meals, because, well, we are millennials after all. Lastly, it allows us to dream. We talk about life now and in the future, set goals and live how we want to live. Financial freedom starts and ends with controlling our spending.
“We don’t know what tomorrow is going to bring so we plan for tomorrow (and beyond) with the information we have today.”
We start by ordering drinks and reviewing our goals for 2019 to make sure we’re taking the appropriate steps to meet those goals. Typically, when we create goals we exceed those goals so we usually tweak them each month to make sure they’re not too easily attainable. Our goals for 2019 include: save $5k in our emergency fund, payoff our small car loan by October, save $35,000 through various investment vehicles, consider refinancing our house to a 15-year mortgage, maintain our blogs (TeachFI and threeismyhappyplace.com), maintain our morning fitness routine and healthy eating, and finish our basement projects. Check out why we have to re-finish our basement, ugh — flooding!
Next, we review our long-term goals. Within that conversation, we discuss the steps we need to take each year to ensure we’re meeting those goals. Again, we tweak as necessary. Life can change so quickly, so it’s important to be flexible. We don’t know what tomorrow is going to bring so we plan for tomorrow (and beyond) with the information we have today. Check out the post on our written financial plan for more information on our long-term goals.
Spending – The Envelope System
The next item on our monthly household review agenda is to discuss our spending for the previous month. This is not an easy discussion, but my biggest piece of advice for managing finances is to understand where every dollar goes. We are fans of Dave Ramsey and the envelope system [Purchase Total Money Makeover]. Linked here is a great explanation of Dave’s envelope system. We have an envelope for each of our main expenses. At the beginning of each month, we allocate money to each envelope and then only spend the money budgeted in each of our envelopes. We’ve been budgeting using the envelope system for over ten years. We have the following envelopes: groceries, household, restaurants, pets, date nights, JJ fun money, Jessica fun money and miscellaneous.
Spreadsheets and Apps
Along with the envelope system, my wife and I really enjoy creating and managing spreadsheets. Creating spreadsheets are great for planning purposes, but it can get difficult and tedious tracking every dollar. A couple years ago, I found an app called Personal Capital [Sign Up Here] and am loving it, and it’s free! I have all of my financial accounts (bank, investments, car loan and mortgage) connected to my Personal Capital account and check on them daily. Personal Capital really helps us discuss our spending for the month. Another great app that people love is called Mint, which is also free.
Ahhh…We Overspent in January
Back to our expenditure review meeting, we realized that we had overspent in January, by a lot! We don’t have a gas envelope because we put gas on credit cards to earn rewards, but something interesting was happening and my wife and I were both guilty. We would pump the gas, then pay inside and get a coffee. It looked like the expenses were just gas when in reality, it was gas and a few extra dollars every trip. We both owned up to it and agreed to discontinue. We also noticed a couple monthly subscriptions that were costing more and more. We talked about those monthly subscriptions and realized the convenience was not worth the cost. We canceled those expenses right before we ordered dessert.
Our evening ended with a tour and brief history of the restaurant. All cooking is done within the wood fired grill pictured on the right.
We concluded our date night by realizing that we’re in a great position to continue to meet and exceed our goals. We are so excited to be on the journey to financial independence. We can’t wait to share our experiences with our son as he grows up to ensure he learns sooner than we did.
Our next household expenditure review is set for Friday, March 1, 2019.
Do you budget and/or track your expenses? Have you tried Dave Ramsey’s envelope system? What are your short-term and long-term goals?