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February 12, 2018

Our Budget Helps Us Spend More, Not Less

The vast majority of people who have created a budget for themselves did so to help limit their spending, or in other words, help them spend less. Fortunately, we have never really had a problem with spending too much, so when we were working, we never had a budget we tried to stick to. Now that we're "retired" we do have a budget, but I created it more to help us spend than to save. Read on to learn what I'm talking about.

So what do I mean when I say our budget is designed to help us spend money? You see, now that we're "retired" and don't have any traditional income, the natural tendency is to avoid spending. The rational thought process, is "If we don't have any money coming in, we should severely limit what is going out." This isn't the worst frame of mind to be in, but if left unchecked it will spiral out of control until we aren't spending a cent beyond the bare necessities, depriving ourselves into misery. That is what we want to avoid, because in reality we have plenty of money in savings, and it's OK to spend it (within reason).

When we were calculating our finances for our extremely early "retirement" we planned to maintain our previous level of spending on most things. That's what many of the numbers in our budget are actually based on. For example, we were perfectly happy spending about $1,100 on clothing annually when we had lots of disposable income, so we now budget $1,100 annually for clothing in retirement.

Where this really helps is when we are thinking about getting a new pair of jeans or something and are hesitating. As I said before, it can feel strange to spend money on something a little indulgent like clothes when you don't have a paycheck coming in every couple weeks. However, our budget reminds us we have money allocated just for clothes, and its alright to buy them. It's not just alright, it's probably necessary to prevent us from looking homeless and to keep us from becoming cheapskates.

2018 Budget
 $         5,500
Property Tax
 $         5,400
 $         4,000
 $         3,500
 $         3,500
 $         3,000
Dining Out
 $         2,200
Home Improvement
 $         1,500
 $         1,500
 $         1,300
 $         1,100
Cash Withdrawals
 $         1,000
Home Insurance
 $             700
Personal Care
 $             450
 $             400
 $             200
 $             150
 $    35,400

In general, the categories where our budget helps us spend more and stay happy are the ones that can seem a little indulgent. Those include travel, dining out, gifts, entertainment, clothing, and personal care. As you can probably imagine, skimping on these could make life somewhat miserable, so it's important we max out these budget categories and avoid feeling like we are depriving ourselves.

All that being said, our budget definitely helps avoid overspending in some areas. It's more important than ever for us to keep our spending under control, and our budget definitely helps with that, especially when we review it monthly, but it isn't something we desperately needed to keep us out of the poor house.

Do you use your budget to help you spend more on anything? Let us know in the comments.

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