Douglas has written a lot in the past few years on the blog about challenges Millennials face and how to tackle them, but what does it look like when put into practice? I am here to share that with you through a series called, “Millennials, Money and Marie”!
A little background: I am Marie, the VP of Bone Fide Wealth and have been working in this industry since 2013. My husband, Andrew, and I are both 28 years old (solidly in the Millennial generation), graduates of the University of Virginia and my husband has his MBA from NYU’s Stern School of Business. We live in New Jersey but both commute into Manhattan for work.
What I am Sharing
It is my hope that through these posts, I can share how we tackle some of the challenges most Millennials face including buying a house and starting a family. Oh yeah, my husband and I bought a house in New Jersey last summer and I’m pregnant with a boy due in July. And we got a golden retriever puppy at the beginning of the year. So, when I say we are tackling these challenges for real. I mean it. As one relative said, we are going full suburbs! House, dog and baby all within one year! Are you as exhausted as I am, and the baby isn’t even here yet?!
I’m going to be writing about what we are actually doing, or attempting to do…like creating a budget. Some of the other areas of personal finance that I will explore are buying life insurance, doing estate planning, general budgeting and budgeting for a baby, how we are preparing our home and family for a baby, our home buying experience and more as we come to it in our own Millennial journey.
I hope that this will pull back the curtain on some of the most common financial planning topics for Millennials and let you see what trying to put things into action really looks like. (And let you know that your feelings are totally justified and normal!) It’s easy to say “track your expenses for 3-6 months” but what does that look and feel like? Here’s a hint: exhausting.
Creating a Budget
I am starting this project with budgeting because it’s an area where we need some work. My husband and I have “started” that project many times over now. But for the sake of the blog, we are going to finish it! To start, I took a look back at some of these articles and blog post that talk about budgeting:
- [Nerd Wallet] Ask Brianna: How Can I Afford to Have Kids?
- [Investopedia] Financial Planning Tips for New Parents
- [US News and World Report] How to Make a Budget and Stick to It
- [Blog] Back to Basics Part 1: Mastering Cash Flow
Some of my takeaways from those included:
- It is expensive to have a baby, but planning ahead can help.
- Where we spend money after baby arrives will likely shift. We may spend less on eating out and entertainment and instead be buying diapers and formula.
- Establishing a budget takes lots of work at the beginning but once we get rolling it should be easier to track and maintain. Let’s hope so!
- Find motivation to keep up on it. I think the impending due date of the baby is taking care of that.
Taking the First Step
With that in mind, I opened Excel (my tracking method of choice – I have tried to use Mint in the past and found that I spent more time recategorizing everything than doing anything else with it, but that’s a personal preference). I put our income at the top and then started listing expense categories. I went through things that are fixed like mortgage, car, utilities, etc. They do shift a little month to month but it’s something that generally I can’t reduce.
Next came the variable expenses such as gas, groceries, Costco, shopping, health care, puppy, etc. Yes, I included puppy expenses on our budget sheet because they are a big category right now. Our adorable golden retriever is still in the phase of vaccines so medical costs are higher. He also goes to doggy day care when both of us go into the city for work because it’s too long of a day for him to be home alone. And yes, while we have him enrolled in doggy day care, we are also looking at day care options for our child. I’ll talk more about that adventure later.
So with all the categories listed out my husband and I looked at what was spent in each during the month of January for variable expenses. For fixed expenses, we used an average of the last 6 months. For things like utilities, that gives us a decent sample of summer and winter numbers on things like electricity and gas bills.
Some articles say to look back 3-6 months to create a budget, but in the last 6ish months we bought a house that had a lot of initial expenses and there were the holidays. It’s easier to get a more realistic idea of a long term budget and expenses when there aren’t a lot of life changes. However, all we have are life changes right now so we decided the closest we could get was to start fresh with 2018 and see how things go as we approach baby time.
Last year we did have a lot of one-time costs with buying a house which is to be expected. For us that include a new king size mattress and bedroom furniture to upgrade from the Ikea full mattress we had in the city. Bye, bye Ikea bed! We had put some money aside for those so it wasn’t a big hit on our savings.
Tracking our Progress
We will be tracking our expenses for the next 6 months and I’ll give an update at the end to see if we were consistent and to outline what our budget goals are going to be for the second half of the year with baby in tow!
And we know life happens. We already know that medical expenses will be more than usual with having a baby and there are a few house projects we still want to tackle before baby arrives. We are hoping to upgrade our refrigerator and dishwasher. They are both starting to have issues and I don’t want to have to deal with that when baby arrives.
However, after the recent rainy weekend we discovered a leak in the roof, that cause water to drip through the ceiling in our master bedroom and onto our bed. That “life happens” thing never “happens” when you want it to. While we wait to see if it can just be patched or we need to replace the whole roof, I’m seeing my shiny new fridge disappear. If we want to do both, we may have to go into our savings. Which is why we have it. We didn’t expect the roof to leak but it’s part of being a homeowner.
Day Care (for Humans this Time)
We already addressed doggy day care, but I was told that child care needs to be sorted out pretty early on. My husband and I put together a list of places in our area and started looking at hours first because we knew we needed something open until 7:00pm because we both work in the city and the commute is much longer. That instantly ruled out a number of places.
I made calls to places that I had heard good things about or looked decent enough from the website. The place I had heard was the best in town didn’t have openings for infants until February 2019. Yes, 2019! Are you doing the math now like I did?
Anyway, I think we have finally found a place that has openings when we need it later this year and where we like the people and facility. And at a price we think we can afford. See why starting to work on that budget was so important? We had to know what was currently left over each month to know what we could afford to spend on child care.
And unfortunately, some of the nicest places are ruled out by price which is a tough pill to swallow. You want the very best for your child, but it may not always be within reach. We are just going to do the best we can for our circumstances, which are pretty good by most standards.
Cost of Living
Speaking of standards, let’s talk about cost of living in the tri-state area. While working on our budget and talking with my family that lives down in Virginia, it can be a little discouraging to see how much more expensive things are in this area. We are paying for the convenience of living so close to New York City and all that is has to offer, but it can also make life tougher.
I know we shouldn’t worry about “keeping up with the Joneses” but let’s be real. We all do it. We all look around at friends in our similar life situations and try to see if we are doing better or worse than them. The trick is that you never really know how they are doing. Much like social media, people portray the version of themselves they want you to see.
But in everyday life, it’s hard not to compare. My mom would chime in right about now with some advice from Yoga philosophy (she’s a yoga instructor amongst many other things) about focusing on yourself or deep breathing or who knows what. Can you tell I’m not really the yoga-type person? I like the workout side of it, but the lifestyle piece isn’t for me.
One of the interesting things about my job is that I do get to see how people are really doing. I get to see the lifestyle they live on the outside and what things actually look like on the inside. It helps to keep things in perspective. We are doing the best we can for us and that is what matters.