This may surprise you, but I really dislike budgets. The word budget, to me, reeks of deprivation and drudgery. I know that some people can benefit from tracking how they spend every single penny, but I could never get myself to do it.
I prefer an overall money management strategy and not a specific budget. Spend less than you earn. Maximize your savings rate. Invest smartly.
When I was paying down my student loans, I meticulously listed all my fixed expenses – rent, utilities, minimum student loan payments – in a notebook, but for my variable expenses, I just threw everything on my credit card and paid it off in full each month, never carrying a balance. I utilized my wants list strategy and was generally happy with my level of spending.
When I was working towards financial independence, I simplified even more and stopped splitting my fixed expenses into categories. I just calculated my overall expenses and my net worth, plotting them on my chart.
Now that I’m “retired”, I’m trying to figure out the best way for me to plan moving forward. If there’s only one piece of advice that I can give you, it’s that your money management system must be fluid. You must adopt a strategy that fits your personality, your goals, your values, your stage in life. I do love my financial independence charts, but I suspect that not having an income line to mark will seriously kill the buzz of updating it.
Until I find a money management route I like better, I plan to continue to update my charts quarterly.
Here is what my chart looked like at the end of August 2015.
I tweaked my expenses slightly as my Asia trip ended up costing a bit more than I realized.
Here is what my chart looked like at the end of September 2015.
September was another abysmal month for the market and my net worth dropped $6,000. It was also an expensive month tying up loose ends in Sydney and paying for more of my Asia trip.
Plotting this data made me long for my lucrative old job for a second.
But then I looked up and realized that I’m laying in a hammock in the Cayman Islands. I love love love my life now. I wake up when I want. I go to sleep when I want. I look forward to everyday. I love writing. I love reading. I love feeling like my life is my own again. I come first and not my job. I’m plotting which country to visit next and I am happy. I will miss payday twice a month, but every other day is incredible. I know, also, that my expenses for the next couple of months should be much lower. These “losses” that I’m experiencing aren’t really losses and won’t be losses until I pilfer from my investment funds. I have enough in my checking account to cover me for at least a year and I don’t plan to touch my VTSAX for at least that long. I’m hoping the market recovers by that point.
Readers, any suggestions on how I should manage my money going forward? I need a new goal and a new visual aid.