This post may contain affiliate links and we may earn a small commission for purchases made through the same, at no added cost to you. Please read more about our policies. Thank you.
As I’ve written before, my family recently moved to a new home, in a different town. That means we’ve been keeping ourselves busy with lots of chores along with some fun things, plus a hefty dose of learning opportunities! Sometimes learning means reminding yourself about good lessons you’ve experienced in the past, and to which it is worth returning.
Lessons from the garage
We spent the last few days on the herculean task of organizing our garage – chock full of boxes since the move. Our last home had substantially more storage space, including a large garage and basement area – rare for California. Things are a bit more limited in our new abode, despite it being a great home in so many ways. So we’ve been continuing our purge of items no longer needed, organizing what we want to keep into bins, and putting them on the myriad shelves we’ve assembled. It’s amazing what you unearth when you take on these kinds of tasks, isn’t it? You can find the truly valuable things – cherished mementos, relics of hobbies long forgotten, and so much more.
Those things were present all along of course. We simply lost track of them in the clutter of life. Everyone is busy, right? For myself, the lesson here is about keeping things visible. Few if any of us live in museums, of course, with all of our possessions on display. It’s also true that we tend to box up the “extra” things, burying them among our belongings, in some out of sight area. There, they can be easily forgotten, despite them being important, and valued. Our approach has been to use clear storage bins, with items grouped appropriately so you can easily look at a shelf and see all that is being stored. We won’t soon forget what we have after this exercise – one we will need to keep doing going forward for it to succeed.
Lifestyle creep, hidden expenses, and the way out!
Our experience with the garage reminded me of the start of my budgeting journey, something that was central to my retirement decision making process and preparation. As I wrote, itemizing your current true spending rate is vital to determine your estimated spending in retirement. Only by digging into the details can you understand all of those costs easily hidden – things like software subscriptions, meals out, gifts, all those things that automatically renew, and the list goes on. Few people really understand the sum of their spending, particularly as it has increased over time. One of the perils of getting raises and advancing in your career is that your spending generally goes up! By making your expenses visible, you can make informed decisions about what is truly important and should be maintained, vs. what can be reduced or even eliminated.
What I have found effective and very relevant to this topic, is the value in keeping your spending visible. In other words, this shouldn’t be a one-time activity. By regularly tracking of your expenses – in a notebook, a spreadsheet, or with software like my favorite – You Need a Budget (YNAB) – free trial here!, everything is out in the open. You can see how spending patterns change and make adjustments as needed. If your expenses are higher in one area in a given month, you can adjust and reduce spending elsewhere – or take from a sinking fund account set up for that purpose. This kind of process also facilitates conversation with your partner, allowing you to make informed decisions together.
I’m not describing labor intensive work! In the approach I use, transactions are automatically imported into the software and 90% of the time, correctly categorized and my budget adjusts without me doing anything. I do a 10-minute check-in each week and then do a brief end-of-the-month reconciliation and confirm next month’s budget. This small amount of time allows me to keep our finances not only visible and accurate, but provides us confidence that we know the true state of things, and can plan appropriately. This is vital in retirement to ensure you maintain your calculated safe withdrawal rate. And if you’re not retired, this can help keep your spending in check, allowing you to pay off debt more quickly, increase your saving rate, and perhaps reach your financial independence goals sooner!
What examples do you have of the value of making things visible? I’d love to hear from you.