Before we get into our summer challenge, I need to take you through a bit of background on our spending process to set the stage a little.
The Funemployed spending elephant
The Funemployed household has kept a budget since 2011. We use the Gail Vaz-Oxlade template because it allows for use of cash, it breaks everything into separate categories for us, and mostly because of its familiarity.*
Probably the most valuable part of Gail’s system is the budget binder. It’s a written record of every penny you spend that week (or month). By tracking your spending, you automatically adjust your behaviour because it becomes so blatantly obvious where you waste money.
The categories in the budget are as follows:
- Everything else
In the last 8 years we have dialed in 5 of the 6 categories to a comfortable and predictable level. We don’t even have to track them anymore, they are on autopilot.
Our elephant in the room is the Entertainment category. It’s our largest spend, and it swings wildly from month to month and year to year. In some years, it has consumed 50% of our entire annual spending.
Now to be fair, it is a bit of a catch all category meant to separate needs from wants. Which means that groceries go under Food, but restaurants go under entertainment. School/work clothes are categorized under Clothing/Gifts but running shoes and spandex are placed in Entertainment. Even the courses that I’ve enrolled in this last year are coming from the Entertainment budget because they’re mostly for fun.
Each year I’ve budgeted $1000/month for this category, but it usually amounts to wishes and unicorns because we always spend at least $20k per year. Unless we book a week long ski vacation in a backcountry lodge, then it jumps to $30k.
So although we know we spend like drunken sailors in this category, it’s never been an issue because we only spent ~40% of our take home income. Except now, I’m not working and it’s been pissing me off that we have discipline issues with ourselves in this regard.
Things changed a few weeks ago. One of my friends husbands lost his job. I had been working with them on their finances for the last 10 months and they have undergone a transformation that I never dreamed possible. A few weeks after putting a retirement plan together for them, his contract was cancelled. Murphy’s law.
Because of all their hard work and their shiny-new emergency fund, they are not in a dire situation for several months, but they do need to pull the emergency rip chord on their wants until he finds employment again.
On paper, it’s possible for them to make ends meet but they need to cut their Entertainment way down. This was a good moment of self reflection for me – How it’s easy to see a path forward for someone else and not for yourself, and how it sucks to have to do something out of necessity but it can be fun if you choose to do it.**
This was the push I needed to birth the Summer Spending Challenge. It will provide accountability and support for both myself and my friend as we try to navigate keeping our entertainment costs as low as possible. I will be posting weekly progress reports on spending as well as any insights or lessons we have along the way.
What’s our goal anyway?
As mentioned above, our budget for entertainment is set at $1000/mo and then promptly gets blown through anyway. If we take out any major trips, it looks like we usually spend $1500/mo in the summer. I’d like to target 1/3 of that for a goal of $500/mo spend. Doable? I have a sinking feeling in my stomach, so that feels just about right…
Feel free to join me. What is your typical summer spend? Could you have a fun and interesting summer if you cut that in half or more? I’d love to hear your thoughts in the comments below.
*2011 was maternity leave for my first child. I also used this time to read every personal finance book I could get my hands on. Since my child was a long slow feeder, I binge watched every episode of Till Debt Do Us Part on Slice. We’re quite familiar with her budget system and her righteous crazy fanaticism for personal finance.
**I’ve had several conversations about how fun and liberating it was to live out of a car for 3 months in New Zealand. This sentiment is shared by other middle-class Canadians who chose to temporarily live a simplified lifestyle (couch surfing, backpacking, car living, whatever). Each of us could return back to our cushy pampered lifestyle when we were ready. Contrast this to a family who has to live out of a car because they have to. No safety net, no idea if the situation will get better or worse, no adventure. It’s incredibly sobering.