Opportunity Cost: In the Wild
On the heels of yesterday’s post about opportunity cost, at least 10 people asked if I would provide a real-life example of how the exercise works in practice. At the same time, Cole (Meaning Over Money co-founder) has been encouraging me to be more transparent with my own numbers. I feel like I’m a very transparent person, but being open with my specific numbers does not come naturally. In fact, it’s quite uncomfortable. Therefore, let’s get me out of my comfort zone!
The following is what our prioritized opportunity cost list looks like. As a reminder, this is everything that’s not a basic need in our household (housing, food, transportation, insurance, phones, interest, etc.). The following list is for a specific month, but it also resembles what a “normal” month looks like in this season of life. Our basic needs are fairly modest and we never carry any debt. Excess income is approximately $3,800 this month. With that context in mind, here we go:
Giving: $1,000
Travel: $800
Kids: $600 (this is a mix of needs and wants, but heavy on wants)
Sarah's Personal Spending: $250
Travis's Personal Spending: $250
Dining Out: $150
Streaming Services: $150
Car Fund: $150
Events/Entertainment: $150
Home Furnishings: $300
Investing: None
House Cleaning: None
College Funds: None
Lake Condo: None
When I pull back the curtain and reveal our list, a few things come to mind.
The fact giving and travel eats up 47% of our excess income is a true reflection of how important those are in our life. They are the foundation of our family.
I believe personal spending for each spouse should be a non-negotiable in every marriage. It acts as a great release valve and allows each spouse to live out their unique values and interests with a portion of the finances. Our house rule has always been each of us shall get the same amount…..no matter what.
For as important as food is to our family, dining out hasn’t received as much love in recent years (initiated by COVID). Something to think about in the months to come.
I’ve been putting $150/month into the car fund for 19 years. It works wonders!
Investing and college funds have taken a back seat in this season of life. This is, in part, a consequence of our heavy giving and travel budgets (mission and memories, as my friend Gary Hoag likes to say).
We stopped getting periodic house cleaning in Fall 2022…..probably something we’ll move up the list in the near future.
Sarah REALLY wants a small condo on a lake. I mean, she REALLY wants it. This is an ongoing discussion in our household and it wouldn’t surprise me if this one moves up the list in due time.
Wow, that was as uncomfortable as I feared. Oh well, I hope you found it insightful, beneficial, and perhaps a bit entertaining. What’s most important to remember is this is a reflection of OUR values. It’s unique to us because we are the ones who have to live our life. And you get to live yours! As you do, I hope you recklessly and relentlessly live your values!