No one likes to budget. Full transparency, Mrs. TFC and I have a pretty loose budget. By “loose” I don’t mean reckless. I mean…we just don’t track our dollars quite as precisely as we could or should.

We have been living below our means for many years so, we embody the “saver” mindset. The beauty of this--we don’t need to assign every dollar a home prior to receiving our paychecks. We significantly surpass our monthly investing goal and are on track to meet the rest of our financial goals.

TL;DR

• Work hard to find yourself on the right side of compounding interest.

• Move at your pace to find success.

• The right move at the wrong time is the wrong move.

• Handle business first, then party.

Our Budget Style

We retroactively track our expenses monthly. We each take a seat at the table. I organize all the paper receipts from the month chronologically. Then I open my laptop and pull up my credit card statement for any additional expenses with a digital receipt.

Mrs. TFC also opens her credit card statement. Then she lays out 7 pieces of scrap paper titled with our categories: Monthly, Housing, Food, Vehicle, Date Night, Mr. TFC Discretionary, and Mrs. TFC Discretionary. Lately we have added another category as our family size has increased, but that’s a different conversation.

I have other entries about how we budget. For this post, I’m only speaking to each of our discretionary allotments.

What are discretionary expenses?

Discretionary expenses are nonessential. Living in a progressive, modern society, essential becomes a gray area. We can all agree dining out is discretionary. How about items such as cell phones or home internet access? Survivable without--yes. Practical--no.

Entertainment is always discretionary. Concerts, sporting events, and streaming services. There are plenty of free options that manifest with a little searching.

Dining out is always discretionary. All restaurants, delivery services, and that morning (or afternoon) barista brew. Travel is usually discretionary. Hobbies are usually discretionary.

Let’s not overlook clothing, electronics, and most subscription services. All forms of gift giving and charitable contributions are discretionary. I recognize many religions recognize tithing. You make the call on religious obligations.

All upgrades to housing or transportation are discretionary. Basically, anything not required to sustain life is considered discretionary. Living without many of these would be considered first-world problems.

Many of the aforementioned items make life enjoyable. And I want you to indulge in every aspect you desire. However, there is a way to go about achieving such a feat. Unless one is completely ignorant to financial standing, and many are, it’s difficult to appreciate discretionary spending when the expenses cause financial stress.

I don’t need to go into detail about the unpleasantries of financial stress. We have all been there at some point.

Overspending unknowingly? You aren’t alone.

The first step of TFC financial coaching is to have each client complete a budget to determine cost of living. It’s impossible to create an accurate budget without knowing where the money goes.

The most common response during the first meeting is, “Wow, I knew we dine out fairly often, but I didn’t think we spent that much.” It’s not always dining out, but it’s always a discretionary expense.

Until expenses are tracked, they tend to add up quicker than one realizes. It’s no fault of the client. They are likely managing their finances how they were taught. If ever formally taught. Or how they perceive others to manage money. Surely living like their peers who are likely in a similar situation.

Mistakes out of ignorance are in a completely different category.

Add it to the budget.

Just be real with yourself. There will be discretionary spending and that’s okay. It’s not okay to spend recklessly.

Adding such a category provides permission to spend hard-earned money on something that gives you joy. Makes you happy. Keeps you going. Be mindful. The amount you spend makes a difference.

If you are feeling financial pressure, keep your discretionary spending low. Account for little luxuries such as a daily coffee. If there is a low-cost luxury that brings disproportionally significant joy to your day, go for it. With a CRNA income, $5 coffees aren’t going to make or break your progress.

With high income earners, I fully support indulging in little luxuries if that’s what it takes to maintain the course.

What NOT to do.

Don’t graduate from CRNA school and start spending money. I don’t feel those with significant debt should be going crazy with the discretionary dollars. I mean, it’s your life, but you are reading a financial blog written buy a guy who likes to think he is doing reasonably well.

I’m an advocate for buckling down the finances for a couple years to make the debt disappear. Continue living like a student for a couple years. Put that healthy income to work and clean up the debt. Then you won’t feel bad about taking that vacation.

Bang for the Buck

There are a few ways to manage discretionary spending. Spend a little bit everywhere or spend the lot for something you really enjoy. If you enjoy traveling, resist other discretionary spending. Book one big memorable trip. Go somewhere really cool.

I spoke with a couple who enjoyed fine dining. They didn’t travel. They didn’t attend concerts and sporting events. They didn’t drive luxury cars. But they would dine at Michelin starred restaurants.

Once per month, they would spend $500+ on a 9-course meal lasting 3 hours. This is significant, but did not impact their overall finances because all of their discretionary dollars were allocated to a single dining experience.

Earn More or Spend Less

If you really can’t survive without the extras, there are plenty of opportunities to earn more green. Really though, CRNAs can net $1,000 per shift. That goes a long way in the monthly budget.

I have been guilty of this a time or two. Mrs. TFC and I try to meal prep. The food is generally healthy, convenient, and affordable. A triple win. Well, if I’m working a bunch of overtime (which includes call), I won’t hesitate to pay for convenience. My 8-hour minimum is plenty to cover a couple meals from a local eatery.

We have encountered this with travel. There were times when I picked up a week that ended on Friday at 1500. This limits flight availability. We have been known to pay a premium to have flights that meet our availability and fly directly to our destination.

Again, the additional income more than covers the price difference. And I enjoy giving anesthesia, so I’ll happily make that trade.  

When to Increase Discretionary Spending.

The time to spend is entirely based on your financial situation. I recommend aggressively attacking high-interest debt to stop the bleeding. Based on current education costs, I’m seeing this process taking 1 to 3 years after graduating CRNA school. Next comes a solid financial foundation including an emergency fund and tax-advantaged retirement accounts.

Increasing discretionary spending at this time is appropriate on all accounts. The hard work is done. It’s time to enjoy your earning with the support of financial security.

Continue investing in whichever avenue suits your fancy. This phase of personal finance takes decades, so don’t burn out here. This is where your investments contribute to your income. It’s okay to spend a bit more and enjoy the finer things in life.

What Mrs. TFC and I do.

The way we budget, the first dollars go towards our financial goal. Typically debt payments follow. Fortunately we are debt free. The next dollars go towards living costs such as housing, utilities, food, etc. What’s left goes towards discretionary funds.

The way the current (soon to be previous) job worked out, the pay is good and the time off is nonexistent. This means we consistently ended up with way too many discretionary dollars and minimal time to travel or vacation.

Instead of spending it all on material possessions we didn’t need, we chose a flat amount to spend on material possessions we didn’t need. This made for a good financial discussion. One I would recommend if you have a significant other.

We chose $1,000 per month for each of us. I don’t know if that’s more or less than what most people spend, but I don’t base my finances around what the average person does because the average person isn’t winning with money.

Unfortunately, the average bear is broke. Financial success isn’t a zero-sum game, so I genuinely wish everyone well.

Mrs. TFC is the spender. She usually doesn’t have much trouble finding ways to spend her discretionary allotment. The allotment allows freedom to spend without repercussion provided the limits are maintained.

On the other hand, I struggle to spend much. Old habits, I guess. My significant purchases over the past 18 months include a pair of boots and this website. I don’t mind rolling over the funds to the brokerage account.

As always, thanks for reading!