It’s strange going from earning more money than I thought I would ever make to not only not earning an income, but paying for the privilege to work.
I quit my job a little more than six months ago and started my own company.
I’ve been fascinated by how my spending has shifted, but more than that, I am intrigued by how much of the spending I don’t miss.
Let’s look at how my spending has shifted and why this transition has been a good reminder about being intentional with your spending.
How I Spent While Employed
When I was earning a regular paycheck, I didn’t think closely about my spending. I had reached a point where my income was higher than my desires.
This meant if there was something I wanted, I bought it.
It was as simple as that. I didn’t need to save for it or think twice about the purchase. With a few clicks, it was on the way.
I know that sounds odd, but when you focus on earning a high income and your desires don’t inflate at the same rate as your income, you can reach a really comfortable place where you don’t need to think about your spending.
I want to be clear that I wasn’t taking $10,000 trips, buying luxury cars, and remodeling my house. If I had done that, I would have had money issues and needed to think about my spending more carefully.
But, I traveled, ate at restaurants, and gifted money when I wanted without too much thought.
As you can probably imagine, when you don’t think too hard about purchases, it can lead to excess.
Excess shows up in many ways.
In my case, a few too many “things” off Amazon. I’m still not sure what I bought from Amazon, but my Amazon bill was higher than I wanted it to be. I also knew whatever I was buying really wasn’t adding anything to my life.
We also ate at restaurants quite a bit. We aren’t an “order every night of the week” couple, but I pushed for eating out on weekends and sometimes once or twice during the week, depending on how much I cooked.
I wasn’t unhappy with how I was spending because I was meeting my other goals, but looking back on it, I didn’t realize how little joy certain spending brought.
It’s been a strange transition going from earning more than I needed to slowly building up my earnings again.
How I Planned on Spending After I Quit My Job
Before quitting my job, I started to cut back on certain expenses and increased others.
I stopped taking guitar lessons and started canceling digital subscriptions, such as Netflix. We had Hulu and Amazon Prime already, so we figured we could make do with whatever they offered.
I subscribed and prepaid for a couple of news sources that were going to be relevant for my job.
We started practicing eating out less. I know using the word “practice” is odd in this context, but I found it helpful to try to experience in advance what I would experience when I was earning less income. I had in my mind that we would only eat out once per week
I struggled with it at first. Going from eating out a few nights a week to one was not easy. This is why lifestyle inflation is so toxic. It’s really hard to cut back on something you’ve been accustomed to.
I also figured trips and other travel were not really in the cards for the foreseeable future. I had made a very bare-bones budget with very conservative estimates.
My total housing costs were going to go up because I was still paying my mortgage plus adding rent in the new location. On a net basis, my housing costs were going to go down because I was planning to rent my townhome, which was going to cover my mortgage plus most of my rent.
I mention this specifically because if a tenant doesn’t pay or something happens to the townhome, I still have to cover the mortgage and increased expenses. It’s a risk most people glaze over with rental real estate.
My health insurance costs were also going to go up because I went from an employer-paid plan to COBRA. In a few months, I’ll be married and will be on my wife’s plan, which will be huge savings.
I also knew my charitable giving would be very minimal. In the past few years, it had been higher as I had been involved in a giving project and connected to a few organizations that challenged me to give more.
All in all, I expected housing costs would decrease on a net basis, restaurant spending would go way down, digital subscriptions would decrease, health insurance costs would go up, and travel would be mostly trips within driving distance.
How I am Actually Spending While Self-Employed
Now that I am a few months into self-employment, I get to see how my spending has changed and how that differed from what I anticipated.
We’ve more or less stuck with eating at a restaurant or getting takeout once per week. Since I started that prior to quitting my job, it’s been an easier transition. I certainly miss eating out more, and it requires more meal preparation planning, but it’s been okay.
I’ve noticed that when we do eat out, we enjoy it more because it’s our “treat” for the week. I’m also much more selective about where we eat. In the past, I’d be okay eating at so-so restaurants because some of the time when we went out, we just needed sustenance.
Now, we make it more of an experience.
I go in with the mindset, “I’m not going to waste our restaurant meal at a subpar place.” This also means that our restaurant bills are sometimes a little more than they used to be in the past, but we aren’t going as much, which means it is less expensive overall.
Something that caught me by surprise, but maybe shouldn’t have, is my willingness to spend on travel. I didn’t expect to travel much, but I’ve been open to making the most of my fiancée’s time off.
I thought long and hard about whether it was a good decision to go to an all-inclusive resort during the winter. It’s not a trip we would normally take. We aren’t really all-inclusive people, but with the Midwest winter combined with pandemic fatigue, we wanted something simple without a bunch of planning or hoops to jump through.
I really struggled with spending the money, but I’m glad we ultimately decided to take the trip.
It was exactly what we needed.
I also remembered back to past trips and how much I enjoyed them, as well as how few we get in this life. Depending on our health and if we only do one big trip a year, there may only be around 40 trips left in our life.
While that may sound like a lot to some, I don’t think it sounds like many.
If you factor in a few years where work or family health gets in the way, that number can quickly decline.
My travel spending has also gone up because of trips I have taken and will be taking back home. Your late 20s and early 30s are not a great time to move away because people get married!
I’ll be going back to Seattle three times in the coming months. One will be for our wedding and two will be for other weddings.
I’ve also gone back because of family health issues.
Combined, that means five trips back to Seattle this year. Although I knew about some of the trips in advance, the family health issues were unexpected. Truthfully, I didn’t really think about how expensive it is to fly back, get a hotel, and rent a car even for the planned trips.
Although my housing costs have gone up, my net housing costs have gone down significantly. It’s weird to go from a mortgage payment to a mortgage payment and rent where the rental income covers most of my housing. It’s been a nice change to help with this transition.
My random spending has also gone down significantly. I don’t consider myself a big shopper, but when I look at the “shopping” category, it’s gone down by about 50%. Part of this has to do with the fact that last year I bought quite a bit of gear for my road trip, and I’m not planning any big adventures like that this year.
But, I also feel like I am being much more conscious of my spending.
It’s strange to go from not analyzing any expenses to feeling challenged to spend in certain areas. For example, I needed a new pair of tennis shoes because I am getting back into tennis, and my last pair were awful.
I found it challenging to find many tennis shoes because of supply chain issues, but the pair I finally found was $140. I wouldn’t have blinked at spending that in the past, but now, part of me feels guilty about spending it.
I also see my spending habits show up at the grocery store, even in areas where it won’t matter much. I find myself thinking, “Oh, that item is a bit cheaper than that other item.” or “Maybe I can get that at Costco instead of the grocery store.”
We are talking about a dollar or less in most situations.
I just shake my head at myself on those days because I know it won’t matter whichever one I buy, but my brain is still judging the situation.
That’s the funny thing about money.
Even if you know certain spending won’t make a difference and you’ve had a healthy relationship with money, the emotional side of money can take over.
Everything considered, I’ve been fairly happy with how I’ve changed my spending.
We enjoy eating out more when we do. At some point when my income is higher, I wouldn’t mind increasing it again, but for now, we are satisfied.
I’m very happy we’ve spent on travel and will continue to prioritize it. I’ve had more clarity on how important spending on travel is for me in a way I’ve never had before.
I’m glad I’ve cut down on random shopping purchases and have been more critical before clicking “buy” with any of the online retailers. Those purchases almost never brought joy.
Summary – Final Thoughts
Big life transitions are good opportunities to think and reassess what is important.
My spending never got out of hand, but it didn’t align as closely as it could with my values.
When you have more, it’s easy to waste more.
I’m thankful I thought about my spending in-depth prior to the transition because it made it easier than suddenly one day needing to change my spending. In a way, it was like a trial run.
As much as I prepared, I was still caught off guard in certain areas. I figured out how important travel is and became more mindful of the breaks we have together to do something special.
I also rediscovered that we don’t need much stuff to be content. Having moved across the country, there were times when I wasn’t living with much more than a backpacking pad, a few dishes, my laptop, cell phone, camping chair, and a few other items.
Some of what we think we need, we simply don’t.
I’m looking forward to seeing how my spending changes over time and with future transitions.