{"id":13,"date":"2022-02-21T13:00:00","date_gmt":"2022-02-21T13:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/"},"modified":"2025-09-05T16:50:15","modified_gmt":"2025-09-05T16:50:15","slug":"a-better-way-to-do-long-term-financial-planning-amp-budgeting","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/","title":{"rendered":"A Better Way to Do Long-Term Financial Planning & Budgeting"},"content":{"rendered":"
\n

I was thinking the other day about how my lifestyle would change if I moved to a place like New York City.<\/p>\n

Moving from Texas to Colorado was relatively easy, from a \u2018budget restructuring\u2019 standpoint \u2013 while Colorado is more expensive than Texas \u2013 they\u2019re still on the same planet, metaphorically speaking. To be annoyingly specific, Dallas\u2019s cost of living index is 101.6, and Fort Collins\u2019s is 118.3<\/a>. <\/p>\n

So yeah \u2013 it\u2019s more \u2013 but it\u2019s not astronomically<\/em> more. It was simple to migrate my Dallas lifestyle to Colorado and adjust in a few areas (more money toward rent, less toward eating out, etc.). <\/p>\n

But as I thought about other places I\u2019d like to live someday (like New York City), it felt like we were leaving Earth and taking a leased SpaceX rocketship to Jupiter.<\/p>\n

My rent jump from Dallas to Fort Collins had more to do with the fact that we went from a 2BR apartment to a 3BR home, but also \u2013 sadly \u2013 that the cost of living index for Dallas housing is 92.9 and Fort Collins is \u2013 are you ready for this? \u2013 168.1. That\u2019s 80% higher.<\/p>\n

Our rent went from $1,741 in Dallas to $3,000 in Fort Collins \u2013 a jump that represents slightly less than 80%. <\/p>\n

But housing in New York City? Try on \u201c294<\/a>\u201d for size.<\/p>\n

When I was thinking about a hypothetical New York City budget, I felt like none of my standard \u2018regular-ass place to live\u2019 ground rules made any sense anymore. It got me reflecting more broadly on whether or not our typical \u201cbest practices\u201d ground rules are the most efficient way to create budgets in the first place.<\/p>\n

I remember getting my first salary \u2013 the #1 question I had? <\/p>\n

\u201cHow much of this should I save?\u201d<\/p>\n

Followed closely by, \u201cWhat\u2019s a reasonable amount to spend on rent?\u201d<\/p>\n

Then, \u201cHow much \u2018car\u2019 can I afford?\u201d<\/p>\n

I wanted a neat framework to layer on top of the one factor I knew for certain: My income. More precisely, I wanted someone to prescribe to me a realistic amount to spend, save, and invest each month. <\/p>\n

What if there\u2019s another way to plan in the long-term<\/em> for these types of things?<\/h2>\n

Paid non-client of Betterment. Views may not be representative, see more reviews at the <\/em>App Store <\/em><\/span><\/a>and <\/em>Google Play Store<\/em><\/span><\/a>. <\/em>Learn more<\/em><\/span><\/a> about this relationship. Any links provided to other websites are offered as a matter of convenience and are not intended to imply that Betterment or its writers endorse, sponsor, promote, and\/or are affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.<\/p>\n

Hypothetical examples are for illustrative purposes only, not attributable to any specific portfolio\u2019s performance, and should not be utilized when making a specific investment decision, as actual performance may vary depending on your unique circumstances and factors not necessarily accounted for here, such as market volatility, inflation, advisory fees, reinvestment of dividends or earnings, rebalancing, or tax-saving features, etc. Rate of return is assumed to be compounded annually. All performance, events, persons, and results described herein are entirely fictitious.<\/em><\/p>\n

I\u2019m going to use housing for these examples because it\u2019s something that most people can relate to if you like to indulge in the human need for shelter, whereas other slipperier budget items are more dependent upon preference and variables that would be too irritating to try to standardize.<\/p>\n

For example, if you make $3,000\/mo. and use the 30% rule<\/a> to judge your maximum cost of \u2018responsible\u2019 housing, you shouldn\u2019t spend more than $1,000 on the roof of your head (lest you feel hella strapped). <\/p>\n

But let\u2019s take this to an extreme to illustrate what I mean: What if you make $15,000\/mo. in New York City? Should you spend $5,000\/mo. on housing?<\/p>\n

Should someone who makes $10,000 automatically upside to a place that costs $3,333 if they\u2019re happy in a spot that\u2019s $1,000? No!<\/p>\n

Maybe starting with our income and backing into an appropriate budget isn\u2019t<\/em> the best long-term solution. It\u2019s a great starting point <\/em>when you\u2019re in the \u201caverage entry-level salary\u201d bucket and need some parameters to prevent you from going USDA Choice buck wild, but quickly loses its utility as you earn more (or move to a place where the rules are made up and points don\u2019t matter, economically speaking).<\/p>\n

Maybe \u2013 instead! \u2013 we can start with the type of lifestyle we\u2019d like to live, and then<\/em> reverse-engineer the income needed to make it happen comfortably (while still allowing for investing at the pace we\u2019d need to in order to reach financial independence in a reasonable amount of time; if you\u2019re looking to start investing, check out Betterment\u2019s<\/span><\/a> investment options like a Roth IRA offering or General Investing goal). <\/p>\n

Sure, it\u2019s not as actionable in the immediate-term, but imagine understanding exactly<\/em> what you\u2019d need to create the life you want: Then job-hunting accordingly. <\/p>\n

How would you execute this in practice?<\/h2>\n

You\u2019d probably start by assessing what you\u2019re spending now and how those numbers would have to shift in order to hit your \u2018ideal life\u2019 budget.<\/p>\n

(Granted, this whole \u2018ideal life\u2019 thing is slippery and nuanced, but it\u2019s the difference between, \u201cI make $4,000 per month so my cost of housing shouldn\u2019t be more than $1,200,\u201d and, \u201cThe place I actually want to live in costs $1,500 per month, so how does my income need to change to support that?\u201d)<\/p>\n

Like I said, not as actionable short-term<\/em> as cutting costs, but \u2014 I think \u2014 a more effective way to plan financially and design a life that you love by adjusting the factors that we formerly treated as fixed and limiting (read: income).<\/p>\n

Maybe that means in the meantime you\u2019re following the standard rules of the road, but you can be actively working toward something better.<\/p>\n

You may decide that your ideal budget is as follows (let\u2019s indulge, yes?):<\/p>\n

    \n
  • \n

    $1,500 for the roof over your head<\/p>\n<\/li>\n

  • \n

    $400 for the sweet luxury sedan in the driveway (hey, maybe you\u2019ve got a long commute \u2013 I\u2019m looking at you, LA)<\/p>\n<\/li>\n

  • \n

    $800 for Whole Foods binges<\/p>\n<\/li>\n

  • \n

    $500 for restaurants, coffee shops, and bars<\/p>\n<\/li>\n

  • \n

    $500 for all other living expenses (clothes, streaming, pets, etc.)<\/p>\n<\/li>\n

  • \n

    $200 catch-all miscellaneous overflow<\/p>\n<\/li>\n

  • \n

    $100 for personal care (haircuts, facials, astrology palm readers, etc.)<\/p>\n<\/li>\n<\/ul>\n

    Great. That\u2019s $4,000.<\/p>\n

    What if your current income amounts to $3,500 after taxes? Well, then we know we don\u2019t have a spending issue on our hands \u2013 we have an earning issue.<\/p>\n

    Spending $4,000\/mo. means you\u2019ll spend $48,000 per year, giving us a nice round \u2018financial independence\u2019 number of $1.2M.<\/p>\n

    Fantastic. Now we get to ask the super fun <\/em>question: How long do you want to work? 20 years?<\/p>\n

    Great. We\u2019ve got 20 years to hit $1.2M (inflation-adjusted), and we know we want to make enough to spend $4,000\/mo. <\/p>\n

    Doing some back of the napkin math (and by that, I mean I plugged these figures into my Financial Independence calculator I built), if you\u2019re starting with $0 in invested assets today and want to spend $4,000\/mo. adjusted for inflation in perpetuity, you\u2019d need to make $110,000\/year to become financially independent in 20 years.<\/p>\n

    See? Math is fun when it clarifies what you need to do to live your \u201cideal life.\u201d And like I said: Even if you have $0 invested today<\/em>, it\u2019s still a 20-year timeline. (Investing with Betterment can make starting insanely easy, too, since their algorithm automatically takes your investing goal details into account when it determines your allocations.)<\/p>\n

    That calculation assumes a few things: <\/p>\n

      \n
    • \n

      You\u2019re getting a 3% income bump annually<\/p>\n<\/li>\n

    • \n

      Your spending<\/em> is increasing by 3% per year, for inflation<\/p>\n<\/li>\n

    • \n

      You\u2019re getting an 8% return annually on your investments, on average (when accounting for inflation, it\u2019s a real rate of return of 5% on average, so relatively conservative)<\/p>\n<\/li>\n<\/ul>\n

      Work is for money, and money is for living a great life by design<\/h2>\n

      This is helpful, no? Imagine realizing that you could (a) live your ideal life and (b) retire in 20 years with a salary of $110,000. That could really<\/em> help direct your career pathing if you know, for example, that managers at your company top out at $95,000 \u2013 maybe it\u2019s time to look elsewhere, if that\u2019s the case<\/strong>.<\/p>\n

      Or, you might find that you\u2019re actually already<\/em> pretty close to (or above) that number, and realize you\u2019re right on track and can stop feeling guilty for having \u2018expensive\u2019 rent. Expensive is relative<\/strong>.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

      I was thinking the other day about how my lifestyle would change if I moved to a place like New York City. Moving from Texas to Colorado was relatively easy, from a \u2018budget restructuring\u2019 standpoint \u2013 while Colorado is more expensive than Texas \u2013 they\u2019re still on the same planet, metaphorically speaking. To be annoyingly […]<\/p>\n","protected":false},"author":178814,"featured_media":2434,"comment_status":"closed","ping_status":"open","sticky":false,"template":"si-template-single-post-everyday-spending-and-budgeting.php","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[45],"class_list":["post-13","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-spending-and-saving","tag-everyday-spending-and-budgeting"],"yoast_head":"\nA Better Way to Do Long-Term Financial Planning & Budgeting - Money with Katie<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Better Way to Do Long-Term Financial Planning & Budgeting - Money with Katie\" \/>\n<meta property=\"og:description\" content=\"I was thinking the other day about how my lifestyle would change if I moved to a place like New York City. Moving from Texas to Colorado was relatively easy, from a \u2018budget restructuring\u2019 standpoint \u2013 while Colorado is more expensive than Texas \u2013 they\u2019re still on the same planet, metaphorically speaking. To be annoyingly […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/\" \/>\n<meta property=\"og:site_name\" content=\"Money with Katie\" \/>\n<meta property=\"article:published_time\" content=\"2022-02-21T13:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-09-05T16:50:15+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/OnlinePay_Green-Mint_100x756.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1001\" \/>\n\t<meta property=\"og:image:height\" content=\"757\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Katie Gatti\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Katie Gatti\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/\",\"url\":\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/\",\"name\":\"A Better Way to Do Long-Term Financial Planning & Budgeting - Money with Katie\",\"isPartOf\":{\"@id\":\"https:\/\/moneywithkatie.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/OnlinePay_Green-Mint_100x756.png\",\"datePublished\":\"2022-02-21T13:00:00+00:00\",\"dateModified\":\"2025-09-05T16:50:15+00:00\",\"author\":{\"@id\":\"https:\/\/moneywithkatie.com\/#\/schema\/person\/51ab3e47f462d7af0d7d2b00ab153000\"},\"breadcrumb\":{\"@id\":\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#primaryimage\",\"url\":\"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/OnlinePay_Green-Mint_100x756.png\",\"contentUrl\":\"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/OnlinePay_Green-Mint_100x756.png\",\"width\":1001,\"height\":757},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/moneywithkatie.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"A Better Way to Do Long-Term Financial Planning & Budgeting\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/moneywithkatie.com\/#website\",\"url\":\"https:\/\/moneywithkatie.com\/\",\"name\":\"Money with Katie\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/moneywithkatie.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/moneywithkatie.com\/#\/schema\/person\/51ab3e47f462d7af0d7d2b00ab153000\",\"name\":\"Katie Gatti\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/moneywithkatie.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/59c980f5acd370ecf7e985b2da3db33f1883bc4b53677d75e5b8f124f8e1ed74?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/59c980f5acd370ecf7e985b2da3db33f1883bc4b53677d75e5b8f124f8e1ed74?s=96&d=mm&r=g\",\"caption\":\"Katie Gatti\"},\"url\":\"https:\/\/moneywithkatie.com\/author\/katiemoneywithkatie-com\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"A Better Way to Do Long-Term Financial Planning & Budgeting - Money with Katie","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/","og_locale":"en_US","og_type":"article","og_title":"A Better Way to Do Long-Term Financial Planning & Budgeting - Money with Katie","og_description":"I was thinking the other day about how my lifestyle would change if I moved to a place like New York City. Moving from Texas to Colorado was relatively easy, from a \u2018budget restructuring\u2019 standpoint \u2013 while Colorado is more expensive than Texas \u2013 they\u2019re still on the same planet, metaphorically speaking. To be annoyingly […]","og_url":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/","og_site_name":"Money with Katie","article_published_time":"2022-02-21T13:00:00+00:00","article_modified_time":"2025-09-05T16:50:15+00:00","og_image":[{"width":1001,"height":757,"url":"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/OnlinePay_Green-Mint_100x756.png","type":"image\/png"}],"author":"Katie Gatti","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Katie Gatti","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/","url":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/","name":"A Better Way to Do Long-Term Financial Planning & Budgeting - Money with Katie","isPartOf":{"@id":"https:\/\/moneywithkatie.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#primaryimage"},"image":{"@id":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#primaryimage"},"thumbnailUrl":"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/OnlinePay_Green-Mint_100x756.png","datePublished":"2022-02-21T13:00:00+00:00","dateModified":"2025-09-05T16:50:15+00:00","author":{"@id":"https:\/\/moneywithkatie.com\/#\/schema\/person\/51ab3e47f462d7af0d7d2b00ab153000"},"breadcrumb":{"@id":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#primaryimage","url":"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/OnlinePay_Green-Mint_100x756.png","contentUrl":"https:\/\/moneywithkatie.com\/wp-content\/uploads\/2025\/08\/OnlinePay_Green-Mint_100x756.png","width":1001,"height":757},{"@type":"BreadcrumbList","@id":"https:\/\/moneywithkatie.com\/a-better-way-to-do-long-term-financial-planning-amp-budgeting\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/moneywithkatie.com\/"},{"@type":"ListItem","position":2,"name":"A Better Way to Do Long-Term Financial Planning & Budgeting"}]},{"@type":"WebSite","@id":"https:\/\/moneywithkatie.com\/#website","url":"https:\/\/moneywithkatie.com\/","name":"Money with Katie","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/moneywithkatie.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/moneywithkatie.com\/#\/schema\/person\/51ab3e47f462d7af0d7d2b00ab153000","name":"Katie Gatti","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/moneywithkatie.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/59c980f5acd370ecf7e985b2da3db33f1883bc4b53677d75e5b8f124f8e1ed74?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/59c980f5acd370ecf7e985b2da3db33f1883bc4b53677d75e5b8f124f8e1ed74?s=96&d=mm&r=g","caption":"Katie Gatti"},"url":"https:\/\/moneywithkatie.com\/author\/katiemoneywithkatie-com\/"}]}},"_links":{"self":[{"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/posts\/13","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/users\/178814"}],"replies":[{"embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/comments?post=13"}],"version-history":[{"count":1,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/posts\/13\/revisions"}],"predecessor-version":[{"id":2150,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/posts\/13\/revisions\/2150"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/media\/2434"}],"wp:attachment":[{"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/media?parent=13"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/categories?post=13"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneywithkatie.com\/wp-json\/wp\/v2\/tags?post=13"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}