I'm having the perfect lazy morning -- after a night out with friends to celebrate a friend's birthday (we actual made it to DC this time instead of staying in Arlington - yay!), I have spent the past few hours reading celebrity gossip, reading one of Suze Orman's personal finance books, reading some awesome gender/life/politics articles on rolereboot.org, all while drinking red roobis tea and eating proscuitto. I do so enjoy the perks of living alone.
I recently made an introductory appointment with a fee-only financial advisor (more on that later), and set up time to meet in May for half an hour. To prep for that, I filled out some forms about my income/savings/investment/expenses. That got me thinking about some bigger questions, like how much I should be saving for grad school, buying an apt/condo in the future, or other relatively short-term expenses -- and not only how much, but in what vehicles.
Thinking about these short-term goals involved taking a look at my current spending & savings rate. I'll admit that I could definitely be smarter about things. I get paid on a monthly basis, with my 500/month contribution for my 401K and 150/month contribution for the metro taken out automatically. On top of that, I get reimbursed for my work-related travel expenses from that month as well, which is anywhere from nothing to 2K. So this is probably a bad thing that I'm not really sure how much I get paid every month. Looking at my bank account, my paycheck has been: $5,155, $6,229, $4,520, $6,192, $6,177, and $5,537. I'm going to estimate $4,500 as my true monthly salary (the rest is just reimbursement for my work-travel purchases).
I have very few fixed expenses -- my rent is $1590, which probably sounds awful, and did to me coming from 4 years of college in Pittsburgh, but I promise it is worth every penny to me. My cozy studio in a prime (and convenient for work/shopping/biking/restaurants/airport) location is worth more than that. No utilities (water/heat/cable/shitty internet) as those are included. Now that my parents' Netflix gift expired, I'm paying $8/month for their 1 movie at a time plan. I do spend a couple of bucks a month on magazines (have subscriptions to Money, Smart Money, Kiplingers, Glamour, and Cosmo.) I joined a gym with a $50/month membership, but my company started reimbursing up to that amount for health/exercise, so that's covered. Love me my iphone but not the huge bill, but again work covers the bill almost in entirety. I do go to Pittsburgh once a month to see my boyfriend, but I've been lucky enough to combine it partly with work-travel, so I hope that continues. Still, I suppose the buses and flights on the other occasions add up.
I've maxed out my IRA for 2011 & 2012, to that's 10K right there, but I invested that in a lump sum. I contribute to organizations that are important to me (MS Society, American Cancer Society, Planned Parenthood) but those are also 1-off donations. Basically my money goes to eating out way too often, going out and paying too much for alchohol, shopping. And of course random purchases on Amazon, and who knows where else. I basically just spend and then whatever's left at the end of the month is my savings. My non-budget is working out OK for now, but I see some clear opportunities to save money. The big one is bringing lunch to the office. I usually don't, so that's $8/day or $40/week or $173/month or $2,064 a year I'm spending on eating lunch out. I'm sure I'd spend much less if I brought food. So that's my next goal: save money by bringing food with me for lunch most days.
Still, it's remarkable how your spending often basically expands to whatever your income is. I don't think I spend excessively, but when I look at the numbers (income and fixed expenses) it definitely feels like I should have more saved. I've heard the suggestion of writing out every single expense for a month to get a really good understanding of where your money goes. I, however, disagree with how useful that is. Sure, it'll help. Maybe you'll save a couple bucks a day when you switch to making coffee in the office instead of going to Starbucks. Maybe you'll realize you should subscribe to a magazine instead of buying it off the stands multiple times a year. That'll add up to a sizable sum. (Clearly I think my lunches add up and that it's worthwhile to work on cutting those expenses)
But I think that what matters most is your mentality, your attitude towards money. What matters is the big picture -- are you spending money in ways that allow you to live out your values? If you're not, than saving $100 dollars more a month won't leave you feeling any happier or secure. But I suppose it's a start.