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I’ve never tracked expenses since I live well below my means by my own choice since I don’t have expensive needs and a fairly high income.
To try to track expenses for a FI expense projection has been tedious and horrible, since all the tools don’t correctly classify things nor put returns or venmo payments into the right category.
So I did a simple cash flow for the last 12 mos. Cash flow in (net income less 401k, etc), less taxable investments, less change in savings, which gave me an estimate of 40k annual expenses.
Since I’m married but separate accounts, this seems low but reasonable (we split housing, vacations) but the rest is my expenses (groceries, clothing, insurance, car, personal care (haircuts, massage), gym.
Then I was able to track vacation expenses (my half is around $8K for around 4 trips per year – which is what I would like to budget in FI as discretionary).
That being the case, I’d classify current expenses of around $32k as essential by subtraction.
Within this “essential” bucket, there are some minimal expenses for gym, massage, etc, but classifying those as essential since not huge and those are not things I’d want to give up.
Then maybe I add a small line item for a future car payment (I do not have one now, because I pay if off and keep driving for years), and then maybe another line item at some point for health insurance, but will be covered under my husband’s for the foreseeable future.
Seems like this would also have a buffer of keeping my mortgage in forever which it will be paid off in 15 years, which I’m fine with that buffer for whatever purpose.
Is this too simplistic? It’s overwhelming trying to dig into all this.
I’ve never tracked expenses and at this point cannot even go back more than a year within Fidelity Full view or bank accounts to get that info.
The assumption here is my FI expense goal will be to maintain current lifestyle.
Then I’m adding another 10-20K buffer in here since this seems low (so maybe $50-$60 annual expense), then inflate up until first year of FI.
This is so complex since I can’t really foresee past the next 5-10 years for lifestyle (I’m 42), and looks like nearing FI in the next few years. No debt other than small mortgage.
The “validation” that I’ve been living below means is that after maxing out 401K, I’ve been contributing $40-$60k per year to taxable accounts over the past couple years.
Am I missing anything? I have by no means been depriving myself – I go to the spa, buy healthy good quality groceries (but do not eat out), and take 4 vacations per year.
And actually only realized 6 mos ago that I was in the “FI group” when my investments hit $1m (now around $1.2m).
We just don’t have kids and still living the in the $130k townhome I bought in my late 20’s in LCOL area (so me and my husband split this cost, which is extremely minimal).
I also have been working from home for 5 years so don’t buy much clothing other than outdoor gear for hobbies, nor spend much on transportation.