The First Step to Financial Freedom: Know Your Numbers

Want control over your future? Know your numbers.

“How did you know you were ready to sell your house?”
“How much did you need to make per month for Flynn to quit his 9-5 job?“
“How were you so certain it all would work?“

Because there wasn’t a single decision we made that was driven by emotion.

Everything choice was made based on data and facts, not feelings.

But in order to have the data, we needed to know our numbers intimately.

This diary outlines how and what we tracked in order to make the jump to financial freedom.

It Starts with Tracking.

Unsexy, I know.

But I have budget spreadsheets of my expenses tracking back to 2012.

I could tell you what I spent on groceries, gas or phone bills for any month in the past 12 years.

Now, your budget does NOT need to be that detailed, but a solid 3-6 months of tracking your numbers will give you everything you need to know to set clear goals and make big moves.

The expense categories I’m going to share with you have varied over the years as I went from single, to living with Flynn, to married with kids.

Here are the “categories” I currently track in a simple Google Sheet that I keep updated 1-2x/month.

EXPENSES:

Household
📊 Monthly Rent
📊 Renter’s Insurance
(Ideas for you to track: mortgage, strata/HOA fees, house insurance, property taxes, water etc)

Transportation
📊 Car payments
📊 Gas
📊 Car Insurance
📊 Parking
📊 Maintenance

Household Bills
📊 Electricity/Gas Utility Bills
📊 Internet
📊 Cellphone
📊 House Cleaning

Health Care
📊 Gym Memberships
📊 Life Insurance/Extended Health Benefits
📊 Prescriptions/Health
📊 Paramedical (Physio/Chiro etc)

Food & Entertainment
📊 Groceries
📊 Eating Out/Entertainment

Personal Spending
📊 Clothes & Shopping
📊 Kids’ Stuff
📊 Hair Cuts
📊 Travel
📊 Gifts
📊 Other (If I put anything in this category, I add a quick note to write what it was, ie: credit card annual fees)

I track these numbers month by month, so we always have a rolling 3 month average of our expenses.

In a separate diary, I will go over my monthly “money routine”, explaining how I track all of these numbers and zero out any outstanding credit card balances to reach our final monthly numbers.

The Master Budget

After tracking these numbers for 3-6 months, you’ll be able to see an average of your monthly expenses in each category.

Not only will this give you monthly targets to strive for and be aware of, but it gives you a very clear indication of what we call our “FI (financial independence) number”.

Your find your FI number by summing all of your monthly budget columns to get your total average expenses each month.

This is the dollar amount that indicates at what monthly income you will need become FI, or financially independent and no longer reliant on work to fund your lifestyle.

Here is an idea of what our monthly budget looks like as of June 8, 2024:

On this chart, you’ll see two sets of numbers. The left set of numbers is our monthly baseline expenses when we are at home in Canada. Currently, it totals $5,950.38/month.

The right set of numbers is what our baseline expenses lower to while we are travelling (~$3,824.05/month), which will be 3-6 months per year. This allows us to know how much over our monthly baseline we are spending when we travel.

Things like gas, car insurance, groceries and house cleaning all go to zero. Instead, we count gas and food on our trips to the “Travel” allotment we set each year.

There are certain expense “slush funds” like gifts and car maintenance that we pay into every month whether we are travelling or not because I have taken the annual expense and divided it by 12 to get a monthly amount.

We Know. It’s Lean.

Everyone’s expenses and budgets will look different. We are fully aware that ours is lean and very minimal.

Some people want to enjoy more dining out, nicer cars, entertainment or shopping and that’s cool.

However for us, we’d rather spend our money on retiring Flynn from his 9-5 and making my work optional.

We’d rather spend 4 months of the year exploring the world than being stuck in the rain all winter and buying material stuff.

Our style of living won’t work for everyone.

But trust us, we rarely experience Fear of Missing Out. We’ve realigned our priorities for the life that we want and it looks like optional work and travel instead of stuff.

Final Thoughts

Tracking expenses isn’t the funnest thing to do.

It’s a bit tedious, especially if you are starting from scratch.

But without the knowledge of what was happening with our money, we would have been overspending, stuck at work and putting off life until we were 65 like the rest of the country.

For the freedom we now enjoy, I’ll spend 30 minutes a month logging our expenses on a google sheet.

Tanessa