Where It Goes

Jonathan Clements

I HAVE ONLY A VAGUE idea of how much I spend. I figured it was time to find out.

I’ve never budgeted because I’ve never seen the need. From my early 20s until three-plus years ago, I kept an iron grip on my wallet, spending with the utmost care and saving great heaps of money. Over those 35 years of fierce frugality, I don’t feel like I deprived myself, but I do feel like I thought about money far too much—and tracking my spending would only have made that worse.

But now retirement looms, though I haven’t yet decided when I’ll retire or, indeed, if I’ll ever fully retire. Still, it strikes me that the point has arrived when it would be useful to know how much I spend, especially as I’ve recently been spending more than ever.

To get a handle on where my dollars go, I scrolled through three months of credit card statements and check book entries. What did I learn? Let’s start with fixed living costs.

It looks like our utilities run around $4,800 a year if I combine water, gas, electricity, cellphone and internet, while our 2024 property taxes are $5,800. Random Amazon orders, which include cleaning products, toilet paper, streaming services, specialty foods and so on, add another $3,000.

Groceries and wine come to some $12,000 a year, though that’s the least accurate number here. We live two blocks from two small supermarkets, and it seems Elaine or I pick up at least a few items almost every day. That means that every month we each amass a slew of relatively small credit card charges. Meanwhile, insurance—homeowner’s, flood, umbrella liability, health, vision and dental—amounts to $10,300 a year, with health insurance accounting for two-thirds of that total.

Add it all up, and we’re looking at close to $36,000 a year. Throw in other expenses—clothes, shoes, hair, gym fees, bicycle repairs, home maintenance, taxis, cosmetics and other costs incurred individually by Elaine and me—and the total annual tab rises to maybe $45,000.

You’ll notice I haven’t mentioned three key expenses. Housing and car costs account for half of the typical U.S. household’s spending, but we have neither a car nor a mortgage. What about a third key expense, income taxes? That all depends on how much we earn, so—while it’s a regular cost—it’s far from fixed.

No doubt I’ve missed a few items. Still, it strikes me that our everyday expenses are far from extravagant, which isn’t surprising, given that we have no car and no mortgage. I’ve long believed there’s great virtue in holding down fixed living costs.

Not only does that reduce money stress, but also it’s been the key to my financial success—far more than, say, owning index funds or tilting heavily toward stocks. Modest fixed living costs were the reason I was able to save prodigious sums throughout my career.

Some claim you need 80% or even 100% of your preretirement income to retire in comfort. Based on our fixed living costs, that’s not true for me—unless the benchmark is how much I earned at age 27, the year I started at The Wall Street Journal. In fact, our everyday living expenses will be easily covered by my Social Security benefit, which—if I wait until age 70, as planned—will be some $55,500 a year.

Moreover, if it became necessary, there’s definitely some fat that could be trimmed from our everyday spending. Elaine loves to cook and, by happy coincidence, I love to eat. One consequence: We buy a fair amount of fresh seafood, better cuts of meat and specialty condiments, all of which could potentially be cut back.

But these days, the real fat is to be found in our discretionary spending, which encompasses travel, eating out, concerts, home improvements, and financial gifts to family and charity. This year, such expenses will easily exceed our fixed living costs.

Just one example: We’re slated to travel to England in November for 10 days. The two premium economy plane tickets and the Airbnb in London will cost $5,500, and the final tab will be notably higher, especially after figuring in restaurant meals. That brings me to a rule of thumb I’ve adopted—one that I’m almost embarrassed to reveal: While others may find ways to travel far more cheaply, for us the all-in cost of international trips often approaches $1,000 a day.

When I look at that figure, I get a little twitchy. Partly, it’s what I call old people disease: Thanks to a lifetime of inflation, everything now seems so much more expensive. But partly, it’s because I’ve never spent like this before. I trace the change to October 2020, when I moved to Philadelphia from just north of New York City. What prompted me to open my wallet?

A small part of it might be post-pandemic splurging. But mostly, it’s other factors. I’ve come to realize that there’s little reason to keep saving, that there’s scant risk I’ll exhaust the nest egg I’ve amassed, that the time has come to enjoy the money I’ve saved, that it makes more sense to provide financial help to my kids and to charities now rather than upon my death, that I’m likely to continue earning at least some money through my 60s and perhaps into my 70s, and that we have maybe 15 years to do the sort of traveling we envisage.

A lifetime of frugality has made such spending and giving a whole lot sweeter. It really does feel wonderfully luxurious. And whenever the cash outflow makes me a little uncomfortable, I reassure myself that such expenditures are indeed discretionary and, if necessary, we could eliminate them and our annual spending would plunge.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney, on Facebook and on Threads, and check out his earlier articles.

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