Overspending on Taxes, Shelter and Erewhon: A Millennial's Budget Confession

I consider myself an “overspender”. I don’t see “sales,” “discounts,” or “deals,” which is pretty embarrassing to admit as a wealth advisor. I’ve always wondered if this is a bad thing or if this is just a me thing. But I’m starting to see it as, perhaps, a good thing. I can relate with people who can’t seem to keep their spending under control. I understand why it’s so hard to put “future me” (who would like to retire someday) in front of “current me” (who would like to vacation today). It’s easier to take advice from someone who shares your struggles.

So, last year, I had a crazy idea. Let’s not budget at all in 2024. Let’s find out how fast we drive without a speedometer. After all, as a millennial, I’ve been told that the reason I’m not further ahead financially is that I spend too much on Starbucks. We’ll see. Let’s delete the budgeting apps and get an Erewhon membership to find out just how spendthrift we really are (disclaimer: this is not financial advice!)

As December 31st rolled around, I worked up the courage to step back on the scale… and reinstall my budgeting app. What’s the damage?

I was shocked.

The largest expense was obvious: taxes. I live in California. We pay for sunshine. Taxes topped the list at 25% of all spending- which pleasantly shocked me. As a wealth advisor, one of the things we focus on is how to reduce the amount of money we spend on taxes and free that money up for better use. As a business owner, it’s much easier to do that than if you’re an employee, so thank you to my entrepreneurial wife for being beautiful AND tax-efficient.

Next on the list is also not too difficult to imagine living in Southern California: housing costs came in at 20% of all spending. As much as I love to complain about the rent being too high in California, I was happy with this number. Even though I consider myself an overspender, I’ve resisted the temptation to become house-poor by not getting into a mortgage that would constitute 35-50% of spending… or, it’s just me in denial, finding ways to celebrate not being a homeowner.

Let me just pause there. I just said I was happy that 45 out of every 100 dollars that we spent in 2024 were just to exist in California. Taxes and Shelter. We haven’t even taken a bite of food, seen a doctor, or filled a gas tank, and we’re almost halfway through our budget. I’m patting myself on the back for this? My friends in Tennessee are laughing their heads off reading this. Back to the budget.

The next two, I was not too happy about. We overspent on food (10%) and healthcare (8%). While 10% on food doesn’t sound all that bad, it’s half of what we spent on housing. That number should have been way lower, but we REALLY like Erewhon. This is where the baby boomers are right. We millennials could benefit from making a sandwich at home now and then.

As for healthcare, I included all contributions made to our HSA (which lowered our tax burden), even if we didn’t spend it. So, it might be a little inflated, but it was still way higher than I would have hoped.

To round out the top 6 categories, 12% of our spending went to investments (well done, good and faithful financial advisor), and 8% went to charity. These were large expenses that reflect our values well. We believe that automatically investing a portion of our income is the smart thing to do financially, and we believe that automatically giving away a portion of our income is the right thing to do spiritually and societally. So, nothing but good things to report there.

But let me pause again. Taxes, shelter, food, healthcare, investments, and charity amounted to 84% of our spending in 2024. Not shopping. Not Amazon. (Yes, Starbucks).

In other words, the “fun” stuff didn’t come close to topping the charts. And while it is true that I need to eat out (much) less, I’m not throwing my money away like I thought I was. I’m throwing more than half my money away on the things that you hear very few millennials not complain about: taxes, tent, and healthcare.

See? Most of us are overspenders. I’m not so alone, am I? If you pay high taxes, if you have high housing costs, if you pay too much on healthcare… these expenses are breaking the bank much more than coffee. So, raise a mug with me, and let’s toast to a fun but frugal 2025.

DISCLSOURE: Information presented herein is for discussion and illustrative purposes only and is not intended to constitute financial advice. The views and opinions expressed are as of the date herein and are subject to change. It should not be assumed that Morton will make recommendations in the future that are consistent with the views expressed herein. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. Information contained herein is not written or intended as tax advice and may not be relied on for the purpose of avoiding any federal tax penalties under the Internal Revenue Code. You should consult with your finance professional, accountant, or tax professional before implementing any transactions and/or strategies concerning your finances.