OK, this should be fun! This post is the first of an annual series that I will publish, usually around this time of the year. It will be pretty much what the title alludes to: my total expenditures from the previous calendar year, with comments on what I would like to reduce/change/improve going forward. But before I go any further, there is one big question that I’m sure a bunch of you out there are asking right now:
“Why on Earth is this guy doing this??”
The rationale behind this kind of post is pretty simple – it’s an accountability piece. It’s for me as much as it is for anyone else (although it may also be a decent demonstration of how to build simple budgets…for those who are in search of a way to do it!). It’s a demonstration of what a person who has early financial independence as a goal can do once their brain is wired to pursue its achievement. My approach and my openness isn’t anything new and it’s the modern father of frugality, Mr. Money Mustache, who has inspired me to be so forthcoming. I’ll give some secondary kudos to an up-and-coming millennial blogger, Gwen from Fiery Millennials, for her work on publishing monthly status reports as well. I admire her honesty and sense of humour when talk about this subject!
Note: the name of this report doesn’t have the word “income” in it. For the time being, I’m not yet comfortable publishing these kinds of numbers. That may change one day though…
My process isn’t perfect: although Mint.com allows me to track all of my electronic transactions, I’ve let $800 in undefined cash purchases slip through the cracks. It’s rare that I use cash, however, so the impact of omitting some of my purchases isn’t huge in the grand scheme of things. Still, it does prove that I have something to improve on as I track my spending! I typically use cash to pay for things such as the occasional dry cleaning bill, some haircuts, the odd drink, and the (very) odd cab ride, so those are the areas of spending (laundry, grooming, alcohol & transport) that would have reflected my use of cash.
Upon further review, I found one final loophole: I spent approximately $300 across a range of random purchases, including things such as a (now-cancelled) newspaper subscription, some kitchen items, as well as a few music downloads. I’m going to add this amount (and the $800 in cash spending) to my final 2016 expenditure total toward the end of the post.
Without further delay, let’s crunch some numbers and take a look at how I did with my fixed costs in 2016:
A few comments:
I like where my rent is at, espcially for someone who lives alone in a major urban center. The only way I can conceivably lower this total is to house hack a multi-unit dwelling, which is a topic I’ll talk about another time.
My utility costs are low because my heating bill is included in my rent…this is huge when you live a place with cold winters like Québec!
My phone bill going to come down quite a bit in 2017 as I walk away from features that I’m not presently using, and I don’t plan on upgrading my phone for at least another year.
It’s amazing how a big-ticket annual item like groceries is really a reflection of your habits in the grocery store and your kitchen. The better-developed your habits are, the easier it is to stay on track spending-wise!
Auto payment…definitely something I could write an article about. I have a 0% lease on a relatively new car…not typically the sexiest thing to admit in the world of personal finance. I’m looking forward to making that number $0.00 one day!
One thing that obviously stands out is the asterisk under Auto Registration – that is a transaction that I actually budget for but it was somehow rolled into what I initially paid for my car as I rolled it off the lot. And yes, I could hear the sound of immediate depreciation in the background as I hit the streets of Montréal!
OK, now on to the more exciting world of variable costs:
My two cents (pun sort of intended…):
I am about two tanks of gas under budget for the entire year, and I’m pretty proud of this fact. While my car is an amazing tool for me, I work hard to not overuse it.
Restaurant tabs…just missed the mark!!
Clothing should almost have its own asterisk…I spent a lot of money on some formal clothing right before the end of 2015, so I did not give myself much leeway to purchase new clothes in 2016. A few cash transactions for alterations are missing, so this number should really be at least $150 higher. Regardless, I don’t really need to spend $50 a month on clothing anyway – I’m committed to the wardrobe I have and wearing through garments until they are no longer in good condition. I can definitely do a better job of tracking this expense as well, clearly!
The most staggering number of all is what I spend on “Athletics.” This basically includes all of my team fees for ultimate, softball and flag football throughout the year. Clearly I played more sports than I had planned to originally! I get tremendous value out of this almost $1100 expense, so I don’t see it going away anytime soon. Nice to get a handle on it though!
Charities is an interesting segment of my budget. After reducing what I was spending, I eventually re-added some regular donations part way through the year. This is a number that needs review. One of my longer-term goals is to budget consciously for gifts whether they be for when the holiday season rolls around or should they be for different causes which pique my interest. I’m moving toward giving away more of my income regularly to the world around me, but am still working on how to go about this. The fact that I don’t have a budget specifically for Christmas gifts is a little crazy in my mind…
Too much fast food! Argh!!
Not enough coffee!! OK, in reality, most of my coffees are either made at home, at work, or are bought off gift cards that I receive. This number could really come down going forward.
How to keep laundry costs down: don’t use a dryer! I bought a drying rack in 2016 and am super glad I saved what would have been another $100+ on keeping my cloths clean.
My travel budget is interesting…I feel like if I put more money aside for travel then I would actually travel considerably more than I do now.
Where is my budget for “Entertainment?”…I must not go out as much as I used to! In truth, I often get movie passes from work. It’s really what I do with my sports, as well as the time spent in restaurants and bars, that make up the bulk of what “entertains” me in life. Reading books that I find at my local library is definitely another way around spending money while simultaneously avoiding boredom and getting smarter! Now that I think about it though, a night out at a live show/museum/theatre might be a nice addition to my life! 😛
As you can see, your money can take you pretty far if you plan for it! According to my numbers, I spent a grand total of $22, 327.50 in 2016 to power my lifestyle, which is pretty comfortable overall. Being deliberate with your money and understanding which purchases give you value, which ones don’t, and which ones can be worked around in cheaper and more creative ways can lead to significant savings when these transactions are repeated over and over again.
As you can probably see, I have not included the money that I’ve set aside for repaying my parents for some educational expenses, my savings/investing pool or what goes to the government in the form of taxes. My central aim with this analysis was to do a thorough evaluation of my consumption spending, and show you how I plan my finances.
Budgeting is an incredibly important skill to develop, and (like virtually all skills) becomes stronger, easier and more useful the longer you do it.
What would you do differently if you were to run your own similar kind of spending analysis? How would your expense report look different from mine? Feel free to write in or leave a comment below, and I will get back to you on it shortly!
A few other posts that are related to this topic: