How to budget and save more money

You can’t get married without a budget

As I watched the sun set on my twenties, it dawned on me that I did not want to spend another decade teetering on the precipice of debt. In my twenties I tried to “find myself” through labor and discipline: scooping sawdust out of bins at the City College of New York’s woodworking shop, greasing tins during overnight shifts at the Sullivan Street bakery in Hell’s Kitchen, and washing dishes at SPoT coffee in Buffalo. As I approached my thirties, I decided to “make myself” and I began to seek knowledge from all directions related to personal finance. I listened to hundreds of podcast episodes on from ChooseFI, read dozens of books in the vein of Rich Dad, Poor Dad, and I asked to hear the stories of friends and acquaintances who had reached the mythical status of millionaire. I was committed to escaping the insecurity of financial instability. 

Learning about your workplace benefits 

On an episode of the ChooseFI podcast, I heard that many people have workplace benefits they do not utilize. I contacted Nancy, the human resources officer at my job, and asked to sit down with her for a chat. “Do you know about your EAP benefits?” she asked. “You have all types of free counseling through it: marriage, financial, and nutritional…it really helped me and Teddy get through some tough times.” 

I signed up for financial counseling and soon after, Cole called me to ask a few questions:

“So Sean, do you want to get married?” he asked. 

“Yes,” I responded. 

“Ok, so you’re gonna want to begin saving up money for that. Typically, I recommend my clients save at least $20,000, and if you want to get married in the next five years, you can divide that $20,000 by 60 months. So, add $350 a month to your budget to be safe.” 

We continued forecasting future expenses and breaking them into manageable monthly chunks, while adding them to a spreadsheet. The spreadsheet summed all these expenses up and gave me a numerical value to represent the monthly income I would need to live my ideal lifestyle. 

Why do I need a budget? 

For the first time I realized success no longer had to be a nebulous ideas like “be wealthy,” “happy,” or “famous”. Rather, if I could find a way with all the cleverness, ingenuity, and privilege that I was blessed with to cover my expenses each month, I could then afford a wedding in Mill Valley, owning a home in Sonoma, and winter breaks in Kauai. As a kid in school, I would sit “front-most, center-most,” turn in projects before the deadline, and attend office to have my work reviewed before being graded. I loved the challenge of meeting the expectations provided by teachers. When I transitioned from school into adulthood, I felt disoriented with the lack of expectations and clarity. Where was the syllabus? I spent thousands of dollars and hours creating a music production company, then a writing company, only to have these projects peeter out because I was unable to generate substantial income to support my lifestyle. Learning to budget with Cole taught me the necessary pre-work of estimating expenses and setting financial goals that would keep me afloat during periods of growth and transition. 

How to budget when you are married 

After getting married and joining our bank accounts, my wife and I began to budget together. We would sit down over coffee and sort our disparate expenses from the previous month into neat categories. Sometimes, this led to the revelation of embarrassing spending habits and uncomfortable dialogues. “Sean, why did you spend $600 at Costco this month?” 

“Well, I am opening this new travel rewards credit card and I needed to meet the spending limit so I purchased a $500 Coscto gift card.” 

“WHAT? Why did you open a new credit card without talking with me?” 

Slowly, by budgeting together, I learned financial accountability to my wife, and our relationship deepened because I would weigh each decision with her money and credit in mind. We did our budget in the context of a family meeting and began to set relationship goals. If nothing else, having a family meeting with a budget discussion embedded into it gave us a reason to sit down and be present together. Through this process, I learned about my expenses and which ones I could control and which ones would be consistent on a month-to-month basis. 

What is the difference between fixed and variable expenses? 

By constantly seeking ways to decrease my expenses in order to save more money, I learned the difference between fixed expenses like utilities, transportation, and rent, and variable expenses like eating out, concerts, and subscription services. After reviewing the previous months expenditures, we set objectives to hold our spending on certain variable expenses to a limit for the new month and highlighted that category in red to keep it in mind. Then, we would forecast a number to spend in that category for the current month and hold each other accountable toward that goal. 

How to calculate your savings rate

Our savings rate, or the percentage you get when you divide the money remaining after all your expenses by your total income, hovered around 8% for the year of 2019, even with monthly student debt payments and a new baby daughter. Our goal now is to continuously be above a 10% savings rate each month, and eventually, closer to 50%. Here is an easy way to calculate your savings rate: 

Calculate your savings rate: 
income minus expenses = surplus 
surplus divided by income = savings rate 
How to calculate your savings rate

How can a budget help you save more? 

Before learning to budget, I spent the majority of my twenties with never more than $1,000 in my bank account. Granted, I was lucky not to be in debt, but rarely did I have the extra income to snowboard at Mount Rose, eat out at Central Market, or purchase a Honda that was made in the last ten years. Maintaining a budget became a mirror by which I could reflect on my habits in a small quadrant of time and take immediate action to improve my life. Working with my wife on this process brought us closer together and made us a team that is twice as strong in earning power and accountability than we would be alone. 

Since beginning the budgeting process I’ve met many goals that I set out to do: I purchased a home in Northern California, I married a brilliant and loving woman surrounded by family and friends, and I became a father to a beautiful daughter. Choosing to reflect on my choices through maintaining a budget and collaborating with my wife has given me both the hope and ability to design a life that I want. Where will a budget take you? 

A letter to my 18 year old self

Listen to this post using this link:–Episode-1-A-letter-to-my-18-year-old-self-e4opnh


Young Sean gazing into his future.

Greetings from the dawn of your thirties. You’ve got 10 East Coast winters, 8 years of college, and 1 wedding to plan before we meet, but I’d like to share some suggestions that will deepen your pockets and expand your perspective before that day arrives. These next twelve years will be the best of times and the worst of times: you will have a beautiful daughter and lose your godfather; you will marry the woman of your dreams and watch your parents slowly separate; through all of it, you will transform from boy to man, and it is my hope that I can make this journey a little easier and more rewarding.

And hey, you’ve got a lot to look forward to. You own a 3 bedroom home in Sonoma County; you were just invited to play in an adult basketball league in San Quentin with Matt; you make a fresh Americano every morning using your Breville machine that Mom gave you…life is good.

For reasons beyond me, you are going to work very hard for your money for the next 9 years. From spending the summer in Alaska power washing a 200 foot deck and running errands for wealthy guests, to working overnights at Sullivan Street Bakery in Hell’s Kitchen, you will be like the Saints of old lashing their backs to find meaning and purpose. I’m here to let you know, it doesn’t have to be this way. Let your money work hard while you take it easy and not the opposite. I’m not saying be lazy; rather, take that management position at Sullivan Street Bakery when George offers it to you. And before that, take a teaching methods class at City College and become a teacher right out the graduation gate.

Nine years into your journey to meet me, the light bulb really goes off when Mom sends you that article from Money Magazine about Vicki Robinson. Vicki’s story, about buying a duplex and paying off her mortgage with her rental income, while conveniently living rent-free, comes at the zenith of your frustration. You’ve just been evicted from your apartment in Buffalo and are seeking a new place to live, without a vehicle to facilitate the search. You’ve become tired of the nobility of poverty narrative that somehow infiltrated your mind, and you are ripe for change.

Now, I’m really hoping this letter does not have some unforeseen consequences like in the Butterfly Effect, but nevertheless here are my recommendations:

First, you need to use your creative genius to save at least 10% of your income, every single month. By the time you finish college in 2012, you will have $42,410.00 of taxed social security earnings on record, yet less than $1000 to your name. With the same industry of spirit that led you to scan the walls of your college’s halls for scholarship offers and apply for every one that you were eligible for, figure out a way to save as much of that $42,410.00 as you can. This starts with learning how to track your income and expenses.

To do this, identify exactly how much income you bring to the table each month, and how much you are spending. Anything that is left over, ask Mom to show you how to invest in an index fund. She’ll want you to buy Apple, so do a little bit of that, but with the rest, go for a boring index fund like the Schwab 1000. If you really want to play your cards right, save up all your left over income, then wait until the stock market drops to its nadir on March 6, 2009 and invest everything in that index fund. Like Andrew told you, “When there is blood in the streets, that is when you buy.”

Next, focus on increasing your income. Learning how to leverage your unique talents for profit is one of the most intelligent, creative and fun things you can do. It doesn’t mean your a sell-out; it means you understand how to see things from the perspective of others and provide a meaningful service or product. You could start a tutoring business by posting on Craigslist; do informational interviews with authors, speech writers, and screen writers to learn about how they arrived at where they are at. Find stories of people who inspire you and figure out what steps you can take to move the ball forward in your own life.

And just for fun, don’t quit the City College basketball team. I know it sucks to get made fun of by your teammates, but you are a freshman in college and that is what happens. They aren’t hazing you and you do not need to take it personally. In this case, take it as a sign that they like you and you need to earn your spot in the lineup. And I acknowledge, it is a new feeling to be the only white kid on the team, however it is a vital opportunity for you to experience a minuscule fraction of what people of color feel like everyday. Learning how to move beyond your feelings and look at outcomes is going to be a big challenge for you.

I can’t wait to meet you! You have so many good things going. You’re curious, you’re in love, and you do so many things right. Stick with the Bronx Budgeteer, invest in your education and index funds, and don’t take anything personally. You are your own man.

With love,