Many personal finance bloggers provide net worth, income and expense, and goal updates each month for their financial situation. Some of these bloggers go in-depth into the details and are fully transparent, while others will tell you at a high level their net worth and how it changed during the month.
I love transparency, and each month, I post a blogging income and traffic report sharing my blog statistics, but I haven’t done an in-depth personal finance update since last July.
As I mentioned earlier this Financial Literacy month, I believe tracking your income and expense is incredibly important for financial success. At the end of each month, I go to my personal finance spreadsheet, download my transactions from Mint, categorize these transactions, and assess my spending habits.
In this post, I’m laying it all on the line: I’m going to give you an in-depth look at my spending habits for all of the years I have financials for: 2013, 2014, 2016, 2017, and the first 3 months of 2018.
What gets measured, gets managed; this is a philosophy of mine and I want to show you how I’ve done it in recent years to inspire you to become better financially.
My sincere hope is that you look at my transparency around my finances and look to take steps to make your financial situation better. I truly believe that everyone can get their financial situation in order and can be successful with money.
It doesn’t matter how much you make, it doesn’t matter how much you have currently. By taking steps each and every month to earn money, track what you’ve earned and spent, and adjusting to ensure you are spending money on things and experiences which make you happiest, and staying consistent, you will be on the road to wealth.
A Relatively Frugal 25 Year Old living in the Midwest’s Spending Habits
Comparing and contrasting yourself to other people in this world is a natural thing we all do.
I see your success and I want to know how you did it because I want success.
I’m sure you have similar thoughts about certain areas of life you want success in.
Let’s get this out of the way: I’m 25 years old. I’m a guy and I live in a big city in the Midwest. I’d like to say I’m relatively frugal (which frugality itself has many flavors and definitions).
I’m going to show you exactly what I’ve spent on myself the last few years, starting in 2013, when I was still in college, to the first 3 months of 2018, this year!
This should be a fun experience for both of us!
Spending Categories I Track
One of the first steps to setting up a tracking system is to determine which spending categories you track, as well as determining how granular you want to go with your tracking.
Back in college, this is what my spreadsheet looked like:
I didn’t really know much about accounting, but realized that tracking and seeing my spending over time would be better than not tracking it.
Starting off, the 5 categories I tracked were: food, rent, school related, recreation, and other withdrawals.
Being in college, I didn’t have a car or car insurance, I was still luckily on my parents’ health insurance plan, and I didn’t have to worry about any loan payments.
As I mentioned above, when determining your categories, you can be as granular or as high level as you want. I think going into the weeds is awesome, but you might not care.
Again, for me, I had a category of food. Thinking back, food actually meant a combination of the following:
- Grocery shopping
- Going out to eat or to a fast food restaurant
- Going to the bar
- Getting a snack at the local convenience store
- Buying alcohol at the liquor store
So really, I could’ve broken it out 5 ways, or at a minimum, made it food and drink, but I digress.
Again, it’s up to you to figure out what you like and how granular you’d like your financial tracking spreadsheet.
Creating a New Financial Spreadsheet
After getting a real job and finishing up all of my schooling back in 2015, I actually stopped tracking my finances.
What’s interesting about looking back on this, is that while my income increased from about $20,000 a year to $63,000+ a year, all of a sudden I thought I didn’t need to track my financial situation.
Luckily, I’m a relatively frugal person, and I didn’t let lifestyle inflation get to me.
In 2016, I realized I needed to get back on the tracking train and I’m glad I did it.
With a house, a car, car insurance, a real job, rental income coming from roommates, utilities to pay, and a whole bevy of other things to worry about, my spreadsheet needed a revamping from my college days.
Now, my categorization looks like this:
While not super granular, I do split up utilities, my mortgage and the costs associated with that, any auto expenses, and even track the different taxes I pay each month.
The discretionary spending piece of my spreadsheet hasn’t changed too much: I went from Food, Recreation and Other Withdrawals to Food and Drink, Shopping, Recreation, Hair, Home Improvement, Travel, and Cash Withdrawals. (Hair got it own category because it’s not really shopping, and it didn’t fit in anywhere else 🙂 )
I’ve determined that this categorization works for me.
Food and Drink lumps together eating out, grocery shopping, drinks with friends, and drinks from the store. I could break this out, but that’s more work than I want to do.
Recreation? That is golf, the gym, rock climbing, and other fun activities.
Shopping? That’s me going on Amazon to buy books, or spending money at Christmas for my family and friends.
Again, this is the categorization that works for me (remember, personal finance is personal!)
The Spending Habits of a 25 Year Old Frugal Male Living in the Midwest
Okay Erik, stop messing around! Show me the numbers!
I’ll admit, I’ve been rambling a little bit.
It’s time to get naked and bare all!
(I’m working on being more visual and descriptive with my writing, but I probably didn’t need to write that…)
Spending Habits during My Master’s Program
Back in 2013, I was finishing up my undergraduate degree and starting my Master’s in Financial Math.
The summer of 2013, I started working as a bookkeeper making $12 an hour. To give you a little bit of information on the income side of things, in 2013, I made about $15,000, and after taxes, I was able to keep around $12,500.
Here are all of my expenses from 2013:
I was bringing my lunch to work, going out once a week to the local college bar, and keeping my recreation expenses relatively low. For the first 8 months of 2013, I shared a 2 bedroom apartment with 2 other guys and was paying $522 a month in rent. For the last 4 months, we moved to a 3 bedroom duplex and our rent was $425. (The extra bit in the rent category is utilities I’m guessing).
Other withdrawals is a mystery here: I’m guessing this is shopping or something along those lines.
In 2014, I became a little more comfortable with spending money it seemed and to give you some perspective again, I was still working as a bookkeeper making about $20,000. I took home around $16,000 that year.
Back in 2014, I was networking more for work purposes (and for wife-y purposes, let’s be honest), and would go out to the bar most weekends with friends.
Here are all of my expenses from 2014:
In September, I moved again and started renting for $500 a month. It seems I was starting to spend more on recreation and food, but overall, spending only increased about $1,000 year over year.
Spending Habits after Getting a Real Job
As I mentioned above, I didn’t track my expenses in 2015. I was paying down debt at a rapid pace, bought a house, and started to contribute to my 401(k).
Focusing on the income side of things took focus away from my expenses, and as I said, being relatively frugal, the expenses clearly didn’t cross my mind too much.
In 2016, I started tracking again, and have been ever since. To provide perspective again, in 2016, I made over $70,000 at my day job, and also had roommates paying me rent.
Here are my expenses from 2016:
With a higher salary and passive income coming in from my house, I definitely loosened the belt a little bit on food spending.
In 2013, I was spending about $120 a month on food. Now, in 2016, I wasn’t packing my lunch and would eat out at work. I was now averaging about $450 a month on food and drink.
You can also see how expensive owning a house is. Luckily, as I mentioned above, my roommates were covering about 80% of the mortgage, so while these numbers look big, I was able to hack them 🙂
Still, between utilities and mortgage payments, I spent $26,000+ on housing in 2016! Crazy!
Interestingly enough, recreation spending was down from 2014. With a 9 to 5, there isn’t too much time to golf!
Starting a Personal Finance Blog and the Impact on Spending
At the end of 2016, I started The Mastermind Within.
Focusing on financial freedom, personal finance, and self-improvement, I started to analytically dive in on my numbers.
With this in mind, let’s see how this impacted my spending habits.
Again, to provide perspective, 2017 was the year I made over $100,000 at age 25.
Here are my expenses from 2017:
Comparing 2016 and 2017 show my spending on Food and Drink decreased a little bit, and my spending on shopping, recreation, and travel increased.
At the beginning of 2017, I thought I wanted to get rid of PMI, but then changed my mind and have since looked to capitalize on asymmetric bets to build wealth. You can see two large principal payments in February and March that stopped shortly after.
Other than that, there’s nothing too notable about these expenses. Throughout this time, I was grinding on my blog and business, and didn’t have too much time to spend any money!
Starting a personal finance blog seems to have had a positive impact on my spending habits 🙂
My Spending Habits in 2018
In 2018, I’ve stayed pretty conservative with my spending. I’m now dating someone awesome, and throughout the first 3 months, we weren’t in the same city. I was grinding and spending a lot of my time inside because it also was very cold!
Here are my expenses for the first 3 months of 2018:
My food expenses have decreased again as I’ve stopped going out during this super harsh winter!
Spending Habit Trends Over Time
Lifestyle inflation is something which gets the best of many people.
I’ve increased my income from $12,000 in 2013 to now over 6 figures.
Looking at my expenses, you have seen a slight uptick in food, travel, and recreation spending, but it’s not too much.
One thing that is definite, my housing expense is much higher than college living, but I’ve also been very lucky to have been in a place to house hack and negate a good chunk of this expense.
In the next few years, it will be interesting to see how these trends continue as I now live with my girlfriend.
If marriage and kids come into the picture, there will have to be some more lines added to the spreadsheet! 🙂
My Tips for Tracking Your Income and Expense for Financial Success
What gets measured, gets managed; this is one of my life philosophies.
For me personally, each month, I pull all of my transactions from my Mint account into my free Income Statement Spreadsheet. I categorize my transactions and see exactly where my spending and saving rate landed during the month, and look to see if there are any trends forming.
This is what I use, but you are your own person and might like a different method. I’m a big advocate of thinking for yourself and thinking critically, so stopping here would be short-sighted on my part.
There are a few other personal finance tools and applications I’ve used in the past which I believe deserve a look as well:
- Personal Capital
- You Need a Budget (YNAB)
- Other blogger’s spreadsheets
For you, you’ll have to figure out what works best for you.
Concluding Thoughts on Examining a Frugal 25 Year Old Male’s Spending Habits
Wasn’t that fun?
I hope that by providing this level of detail with my finances will inspire you to go back to your personal finance spreadsheet and see how you can improve.
At the end of the day, here are my recommendations for you:
- Track your income and expenses
- Make sure you are spending money on things and experiences which make YOU HAPPY
While I’m relatively frugal with my spending, my main goal is to increase my income.
That being said, I can’t forget about the other side of the wealth equation. Spending 100% of what I make will not make me wealthy, and tracking is how I can ensure I will be successful.
Readers: how detailed is your spreadsheet? What categories do you keep track of? Do you like when others go into detail with their numbers? Was this post valuable to you?
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