I’m taking a review of my finances so I can be in a good place to prepare for my move back to the US next year. I’ve tracked my personal finances using plain text accounting for several years, but I haven’t really put that data much to use. That is because as an expatriate working in China, my salary outpaces my lifestyle and the local cost of living. I haven’t really felt the need to keep a strict budget. But looking at the cost of living in my target destination in the Pacific Northwest, money will be tighter than it is now.

Let’s see about setting up a budget.

Where to start? Different budgeting ideas

Many different budgeting methods exist. Like many millennials, I was attracted to the FIRE movement. Alas, getting married has kind of put that on the someday-probably-never category.

/user/happyasianpanda made a FIRE flowchart (source, jpg) in the r/financialindependence community. The first box says “Create a budget.” Hmm. Good idea. I’ve skipped over this and gone straight to the paying for stuff part.

Some popular budgeting terms include the 50/30/20 rule (see Forbes Advisor or Investopedia), the cash envelope method, and the pay yourself first method. I remember my economics teacher in high school teaching us about the importance of saving for your future. He always said “make sure you pay yourself first.”

I think I’ll try the 50/30/20 rule to start. Saving only 20% of my income seems like a small amount in my current situation, but it’ll become much more challenging back in the States.

My spending

As I mentioned earlier, I have a fair bit of financial data already at hand. For the past few years, nearly two thirds of my expenses were accounted for by housing, shopping, and food & dining. Shopping includes any purchases of goods that aren’t edible. Food and dining includes anything that I eat, whether I bought it at the grocery store or at a restaurant.

Rent has consistently accounted for about 13 percent of my income. Altogether, food, shopping, and rent account for about 50 percent of my Income. The rest is unallocated. My wife may put some of the money in a CD for better interest rates, but the money is otherwise not put to any use. It's just being eaten away by the dust mites of inflation.

Using the 50/30/20 rule, my current spending looks pretty good. All my spending for me and my wife adds up to half my income. Now that I have a child, that will change. Children need a lot of things!

A look at Seattle

Let’s look at Seattle’s cost of living. Nerd Wallet has cost of living information. The median two-bedroom apartment cost is $3,358. Some Reddit posts from a few years ago, though, suggest that $1,500 to $2,000 is doable in a less fashionable neighborhood or in an older building. Rent probably just went up, as it does. $3,358 a month translates to about $40,000 a year. That’s quite a high bar! Let’s hope there are more affordable options.

Utilities average $220 a month, which adds another $2600 a year.

As an Idahoan, one helpful comment for me was from /user/redandrew02, saying this:

“If you’re coming from Idaho the burbs might line up better with what you’re used to, and you’re still close enough you can enjoy what’s in Seattle, and be able to enjoy all the natural areas.”

I think a mix between big-city and suburban lifestyle would be doable for my wife and me. Cheaper, which my wife will like, but still close and convenient and interesting enough to transition from life in mega-cities like Beijing.

For transportation, gasoline costs about $5.14 per gallon. I’ll probably have to get a car, but i’m interested in the possibility of using public transportation. The Bureau of Labor Statistics notes that transportation costs aren’t significantly different from the national average, with households spending 15.4 percent of their incomes on transportation. Seattleites spend slightly less than other metropolitan cities on cars.

For setting a budget, the BLS data is informative. The average expenditures for housing and transportation in Seattle add up to 50 percent of household expenditures. That doesn’t leave much room for food and other necessities, if I’m to follow the 50/30/20 rule. The biggest place to save, then, is in housing. The way to cut that down is by moving outward.

Seattle will definitely be a challenge to move to with my wife and young child. It’s looking like I’ll have to find a salary of at least $65 thousand to be able to even get my foot in the door. For my next steps I’ll take a look at Zillow and see what sort of prices I’d be looking at for different neighborhoods in Seattle. And I’d better find a good job.