Money Management

Finances have always been a very daunting topic for me, and not so much for Peter. When we started talking more about joint finances and what this looks like for our relationship, I quickly became even more overwhelmed. Peter has always been very precise with money: he knew exactly where every dollar went in terms of spending and investments. I kept ballpark expenditures and savings in my head. I tended not to fret over the smaller details. My guesstimations were usually pretty accurate. After all, I had a healthy amount invested and saved up relative to the course of my professional career. Nonetheless, this presented as one of our first key differences in our approach to money.

Though never financially savvy, I had a frugal-enough background to be conscientious about my spending. It took time and conscious effort to break out of the scarcity mindset. Allowing myself the flexibility to spend without counting pennies was a skill I had to learn, especially as my first real paycheck did not come until residency (and even then, it was quite meager)! This flexibility ballooned slightly over the course of residency when I started moonlighting, and certainly again with my attending position.

The most obvious downside of this laxity was more inaccurate estimations month-to-month. Naturally, there were weeks or months where I’d underestimate (and more rarely, overestimate) how much I had spent. However, it was a margin of error I could tolerate—I did not want to confine myself to such penurious living conditions again.

Peter, however, had always tracked finances monthly by category with detailed spreadsheets outlining his every purchase. And though he leads quite the minimal lifestyle, this precision is not entirely born out of being frugal but rather desire to optimize. Monthly tracking allowed him to identify which categories he could cut back on and which categories he could spend more on. This ultimately allowed for more accurate yearly projections for savings and growth, numbers that are vitally important to his clarity.

Needless to say, Peter found it very difficult to keep up with my guesstimations. He constantly refers the cesspool of ideas and thoughts in my head as “chaos.” Of course, it was organized chaos—unfortunately all tucked away in my brain. Peter made it his mission to undo the chaos in my head, relieve my stress, all the while planning for our financial future.

There are a few key components to the system that Peter built. The first step involved an Excel spreadsheet to track expenses across all our credit cards and bank accounts. Using Google Sheets, Peter was able to implement an itemization function specific to our needs. This would sum up all costs under every category across every account. So now, we not only had our total monthly spending but also knowledge of where the money was going. Though there are already great apps to help track this, the beauty of such a custom design is that we can now pull these numbers into other extrapolations and calculations.

By having our monthly spend all tidied up, we could now track what we were spending annually across various categories. Month-to-month data comparisons allowed us to troubleshoot and reflect on how to do better in the coming weeks. By having annual estimations, we can project for future planning. There’s so much we aspire to accomplish in the next few years that demand planning and proper execution. We knew that a yearly average was likely to provide the most consistent and accurate basis for this projection.

We keep a page dedicated to our net worths, breaking down our total assets and liabilities. This is also tracked on a monthly basis to understand how our investments are growing, and to get a better idea of where we stand financially. This data on our net worth, combined with our data on annual earnings versus spending, made it easy to predict how much money we would have in X many years. It would also give us an idea of how much principal we need to live off just passive earnings—true financial independence. This was the ultimate issue we needed clarity in as we start planning for large milestones like home purchasing and raising children.

Our shared vision for the future is one in which both of us can be working reduced schedules in order to optimize times at home with young children. Ideally, we’d be raising them in more desirable school districts as well. We want to avoid the pitfall of living paycheck to paycheck, all the while being at the mercy of our employers. We’d like the flexibility to be able to drop our work at a whim if needed to tend to critical life events such as when loved ones get sick. Ultimately, we want the flexibility to work simply for passion, purpose, and meaning rather than for survival.

Though it was a learning curve for me, adapting this system has had far more benefit. I thought that I would slip back into pinching pennies and stressed over my (our) financial situation. If anything, I’ve never been of calmer mind seeing the progress we’re making every month. I (we) also feel empowered in making more purchases knowing that it’s within budget. It’s also a fun activity to review monthly and see where we may have deviated from our budgetary goals. We try not to be punitive when we overspend slightly in one category, such as eating out, but use it more as a learning opportunity. This systematic approach has actually lessened the fatigue of the scarcity mindset—together, Peter has helped me shift that energy entirely toward a growth mindset.