Planning For The Future – How Much Money Do I Really Need?

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My route to financial independence is re-planned every 6 months or so. I started out with a 15 year plan, then reduced it to 8 years, then 5 and finally 2 years.

For the first 5 months of this year I’ve only spent $6,863. If this trend continues I’ll end up spending a total of $16,400 for the whole year. Last year I spent $17,800, and because of COVID-19 this year seems to go even lower.

Heck, I might even go lower than $15,000! Fo that to happen I have to spend less than $1,162/month on average for the last 7 months.

I don’t think I want to put that out as a goal, because if the borders open again I really want to travel. What I really like is that my expenses continue to lower for every year, while my income continue to increase. This is a sure path to success.

I now feel confident to say that financial independence is no longer just a dream, it will become a reality within short time.

Let’s say that I’d only spent $15K this year, would I then lower my FI-number?

No, I feel that my FI-number ($500K is already low), so I can’t see any point in going any lower.

But wait, what about the future?

Will my spending continue to be so low?

Probably not due to:

-we’re getting kids one day

-new house in 2021 (a bigger house will probably cost more)

-buying an electric car. (We don’t have a car today). 

So the spending in 2020 will be low, but the really interesting thing will be how 2021 develops.

How Much Money Will I Spend in 2021?

Let’s say that this year (2020) ends with $16,400 in expenses.

If 2021 will bring a kid, car and a new house, my best guess is that the calculation will be something like this:

2020 spending: $16,400
+ first kid: $5000/2 = $2,500
+ car per year: $3,000
+ increased house costs per year: $1,500
= 2021 per year: $23,400 (for me only). 

Somehow I think my expenses will be lower, but we’ll see!

How much are you spending per year on kids and your car? Would love to hear from you!

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Have questions, comments or suggestions? I would love to help you with your FI-journey.

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8 Replies to “Planning For The Future – How Much Money Do I Really Need?”

  1. Man this planning posts, I love them. We are in a similar situation. Right now my expenses are low due to having no kids, driving a very cheap car (which will need replacement with kids) and living in a studio flat. We want to purchase a house, but, it is becoming challenging as housing is really expensive on my area, and that could trash my plans.

    So, so! A Route 2 FI baby coming soon then?

    1. route2fi says: Reply

      I see! Will you still live in England then or planning on moving somewhere else? Nothing concret about a baby, but Let’s see amigo!!

  2. No kids and no car here. However it will come at some point 🙂 Just wondering, I’m looking at your costs and assuming your spouse will probably have a similar budget. So somewhere around the $23K. Am I correct?

    That will put your household budget at $46K which is more than enough for a couple and 1-2 kids. So your budget makes a lot of sense. Just look at MMM, he had a budget of around $25K – $30K for a couple and 1 kid (not including housing which was paid off).

    Just thinking out loud here.

    1. route2fi says: Reply

      You are absolutely correct!

      Great point. I don’t think it will double from $23K to $46K. I will have to look more into this ?

  3. Wow, that’s an incredible spending rate. I spend much more on living expenses, kids, etc. However, some might be related to country / location and cost of living, but regardless you’re doing an amazing job at saving!

    1. route2fi says: Reply

      Thank you so much!!

  4. Thank you for another good article! I have two kids and a 6-year-old car. However, I have saved as much as possible since I began working after I finished my studies about 9 years ago. Before house/kids & car I manage to save about 70% of my net income. Now I have a cruising-pace around 50% agaist FI 🙂

    1. route2fi says: Reply

      50% with kids, car and everything is beast mode ??

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