Ok, I need to start with a confession; I’ve been fretting a bit about money recently. Each month when I look back at my spending habits, they’re consistently above the level that I’m comfortable with, and above what I planned for. I guess it’s probably a feeling many of you have had, at least those who actually track spending. The numbers don’t line up with my plans for financial independence, and I feel a bit uneasy looking at them. Don’t get me wrong, to the average outsider my spending vs saving rates aren’t bad, but they’re not what I want them to be.
Why has this happened
The main culprits are the fabled “one-off” expenses. Things that you pay, thinking they’ll never need to be paid again, or at least not for a year in the case of things like car insurance. The problem is, there have been lots of “one-off” expenses this year. I bought a house, and while I don’t include the money put down for the deposit in my tracked spending, I did include all of the other costs associated with buying the house (surveys, insurance etc) and the costs of furnishing the place since I moved in with a TV stand as my only piece of furniture.
The other more offending area recently has been social occasions and travel. This year I’ve taken three European holidays, and have agreed to a fourth in December. Each one means paying for accommodation, flights, plus food, drink and entertainment. I’ve recently returned from Amsterdam to find I spent £500 for four days and four nights away. I appreciate some will spend far more than this for a similar trip, but looking back at where the money was spent, much of it did little to add to the experience of the trip.
Why do I feel this way?
Reflecting on these feelings, I realise that part of the underlying cause is that over the last two years, I’ve undergone a couple of big jumps in life stages one after another. Last summer I finished university, so went from being a student for five years, living off £3600 a year of student maintenance loans and roughly £2800 a year from part time work. That means for five years I lived on less than half of what is considered the “living wage” in the UK.
After graduation, I went straight into a job with a good salary so was earning a lot more than before, but lived in a house share with four other new graduates, meaning my rent and bills were VERY low. My spending did go up, but the increase was gradual and not huge. I was still living on only about half of my income for most of the first year.
Then, three months ago and only a year and five days after graduating, I completed the purchase on my own house! So I went from living in a run down but furnished house share to having buy all my own furniture and homeware for the new house.
These two transitions in the last couple of years were significant life events, and mean I have more responsibilities now (between work and renovating/maintaining my house) with associated expenses, but part of me still feels I should be spending £40 a month on food and only a fraction of any bills. Acknowledging this has definitely helped how I’m feeling about the current state of my finances. It’s also enabling me to identify the areas of my finances that I need to tackle and bring back under control.
Let me know your stories of money vs emotion
I’m interested to hear your experiences of how your finances have made you feel, or conversely how your emotions have affected your finances! Leave a comment or tweet @thefireeng.