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? 

The unassuming power of the carpool: part 1


20190204_073926Its 2019 in the Bay Area. Everyday, two southbound lanes of highway from Sonoma County hemorrhage out hundreds of thousands of commuters into the expansive Golden Gate. Like the opening scene in Office Space, thousands of commuters inch forward toward their destination, occupying themselves with podcasts, cigarettes, road rage, or whatever else fills that tiny space between bumpers. 

Amidst this Sisyphean slog, my co-worker and I maintain a travelling speed between 50 and 60 miles per hour, discussing what choice cuts of beef we will purchase from Coscto following the work day and how to approach different issues that naturally arise in the work place. 

But how did you gain the privilege of bypassing our fellow commuters? Were you born of noble blood? Or did you gain this power through surreptitious means? My answer to your inquisition is “neither”. 

To gain this unique privilege, all we had to do was the absolute unthinkable — commit to sharing our private resources for the mutual benefit of each other’s pocket book (and the larger environment). 

Here is how I did it.

When I caught wind that my colleague, Ben, also lived in Petaluma, I approached him and proposed the idea. We agreed to switch driving each day and what benefits we have enjoyed. Let me share them with you: 

Primarily, the carpool lane shaves off a minimum of fifteen minutes from my journey to work, but more closer to 25 to 35 minutes on most days. Because Google Maps has yet to find a way to account for the carpool lane, when says it takes 50 minutes to get to work, my co-worker and I usually arrive in 35 minutes. At minimum, let’s say that I am saving 20 minutes a day by carpooling (15 minutes southbound, 5 minutes northbound). 20 minutes multiplied by 20 work days equals 400 minutes per month. 

400 minutes divided by 60 minutes = 6.67 hours. 

That’s 6.67 hours of my life I just clawed back from the system to move me closer to my goal of financial freed. Time is money and I aim to take full control of my time in the coming years. 

Second, my gas bill has literally been sawed in half. I’m talking a rusty, back and forth, obliteration of my gas bill, turning that thing into straight confetti. Let’s break this savings down into the numbers: 

  1. To determine how much gas I used for work:
    I used Google Maps to calculate the number of miles it is from my house to work (25 miles) and multiplied this times two for my commute home from work. 
  2. Next, I Googled, “2007 Toyota corolla fuel efficiency for highway traffic” and found out it is 37 mpg. 
  3. I then Googled, “What is the average price of gasoline in California?” and found out it is $3.16. 
  4. I punched all that information into this fuel cost calculator 

And from this process I learned that “This trip will require 1.47 gallons of gas, which amounts to a fuel cost of $4.65.”

My daily fuel cost of driving to and from work is $4.65 and I drive to work on average 20 days each month.

20 days x $4.65 = $93 dollars a month in fuel 

And since Ben drives every other day, I am now only spending half that $93, which is about $46.50 a month on gas. 

But wait, what about the cost of wear and tear to your vehicle? Driving everyday, working that engine, starting and stopping for 100 minutes, and going over potholes here and there has to cost something. Luckily there is a website dedicated to evaluating those costs.

I punched in all my data again and came up with a monthly cost of $241.08 for the wear and tear on my vehicle. Once again, I grab that monthly cost, set it on the chopping block in my back yard, and BAM! 

Now my wear and tear expense when carpooling are $120.54

So as you can see, I just reduced my commuting expenses from $334.08 a month for 10 months a year (teachers have a 2 month convalescent period to regain their grip on life), to $167.04 a month. 

For the ten-month school year it went from $3,340.08 to $1670.40 per year. 

And for the big picture planning, I will invest that $1670.40 I am no longer spending (but had account for in my budget) into my SWTSX fund. SWTSX has a historical 15 year average rate of return of 8.4%. I’ll continue to dump a monthly contribution of that $1670.40 into SWTSX each month for the next 15 years (when $1670.40 is divided by 12 months, it comes out to $139.20 per month). 

Using a simple compound interest calculator to see what I have after 15 years of my initial $1670.40 contribution with $139.20 a month after that, and I will have $52,392.88 in 2034. 


Action step: Ask a trusted co-worker if they know anyone who commutes from where you live to the same working location.