Mr. Thrifty here today to talk to you about the team I’m involved in every day – marriage. Now that we have been writing this blog for a few months, we wanted to dive deeper into our team dynamic to make this blog more personable to our readers. We emphasize “team” because we are proud that Mrs. Thrifty and I bring different skill sets to the table and work together the way any successful team would, including our financial teamwork.
I come from a finance background where spreadsheets and numbers are my Bible. I build our monthly personal finance budgets so that Mrs. T and I can build the financial future that we envision.
Mrs. T is the definition of a planner. Her travel itineraries are legendary. It’s so comforting to know that we aren’t jumping into a trip without being properly prepared. No stone goes unturned exploring every new location we visit.
You can see why we arrived at the concept for this blog – Thrifty Trekkers. Our team wants to explore our passion of traveling while still being fiscally responsible. We’re comfortable with spending our hard-earned cash on these trips because we know we’re aggressively saving for retirement and being frugal with the other aspects in our lives.
So let’s explore how we got here and specifically what steps we take to make sure our team is working cohesively.
Monthly Finance Meetings
I used to try everything to get Mrs. T involved in our finances as I’m the one consistently updating them. Yes, we even took our laptop to a restaurant one time to review them. At the end of the day, we’d just get bogged down in details and we were missing the big picture.
With that in mind, I worked towards a compromise that would fulfill our goals: keeping us on budget and giving Mrs. T a snapshot of our finances. We now sit down once a month to review our expenses, cash projection, and net worth. See the attached spreadsheet for an example of what we use.
Expenses by Category
We use Personal Capital to aggregate our expenses by month and year-to-date and compare it to our predetermined budget. Here is where you can read more about managing your expenses. If you don’t have a sample size for a budget, just use something that’s reasonable by category and fine tune it over time. Or use it as a goal and make yourself stick to it. The cells in our spreadsheet are automatically formatted to turn green (under budget), yellow (on budget), and red (over budget).
Use this format to review your expenses and try to attack one category each month! We recently reduced our internet bill by buying our own router since we were renting one from the cable company. Our time to recoup that investment will be 6 months, but our service is much better compared to the previous model we were renting.
Cash Forecast
Cash comes in and cash goes out at the end of the day. I love using this rolling cash forecast to project how much cash we can allocate to our recurring expenses as well as our investments each month. One trick for your expenses (cash going out): use the total budgeted expenses you come up with above to project what the total outflow will be.
Net Worth
At the end of the day, it’s nice to know where your total net worth stands from all your aggregated accounts. Personal Capital does this for you too, but it’s nice seeing it in a different format. However, there are a few omissions from the list I commonly use so I’ll explain:
- Liabilities – for us these would include credit card bills that are due each month. My logic behind not including them is that they would be a wash against the cash balance that’s included. We pay our credit card statements each month with no carryover balances (and you should too!), so as long as we’re projecting we’ll be cash flow positive (see section above) I’m not worried about this.
- Fixed Assets – these would include cars and mortgage for us. One argument would be to include the equity we own in our house since it’s a (hopefully) appreciating asset. Cars, on the other hand, depreciate rapidly and I don’t advise you to include them here.
All said and done, my net worth calculation is likely overstated from my lack of credit card balances and understated from not including the equity we own in our house. I’ll call it a wash and move on.
Our finance discussions have become much more productive with the introduction of this tool, and we’re working better as a team to stay on budget. Don’t beat yourself up if you miss budget in a few categories each month. One of our goals is to avoid lifestyle inflation as we continually try to improve our earnings through promotions and hard work.
Call to Action
No matter what level of proficiency you’re at with your finances, it’s time to take charge and work together with your teammates to build the financial future you envision. If you’re starting at zero, take that first step. If you consider yourself an expert, identify one aspect of your financial life you can improve. Get out of your comfort zone and take action with the one aspect of your life you can 100% control.
Image credit: Pexels
