Archives for January 2016

My friends Lisa and Kyria have both posted about their spending for the last year or two and I am a big fan of talking about important things like money (mainly, because I think it shouldn’t be a taboo and because managing your money is not something that is taught in high school or college (which I think is a big mistake and should be changed, because too many people have problems managing their money in adulthood!).

I think it was very interesting to see how others spent their money. Spending is – as you can see if you do the comparison – a very personal matter and there is really no right or wrong in what you spend your money on. There are of course the necessities, but beyond that, what’s important to one person, might not even show up on the chart for another. 

In attempt to be more transparent about finances and to maybe spark more conversation about it, I thought I’d jump on the bandwagon and share our 2015 spending report as well.

 

A few notes about our spending. This pie chart was created from my data in YNAB, the budgeting software I’ve been using since April 2015 (and which I reviewed here). I am still using YNAB and very happily so. They recently (as in: this month) came out with a new web-based version and I am trying that out parallel to the old desktop version and so far, I like it. One of the advantages is that you’ll now be able to import transactions directly from your bank account(s) (which didn’t really bother me before, but it is convenient!) and I love having the web-based version available anywhere if I want to look at something. I had a pretty good idea what we were spending before I started using YNAB, but since April, I have literally tracked every penny that went out of our accounts. 

So, just to be clear, this is technically not our full 2015 spending report, but only for about 3/4 of the year, but I think it’s still a pretty good representation of our overall spending habits. 

I also want to point out: these percentages are based on our actually spent money, not income (although this would be also very interesting statistic to explore). Not included are contributions to retirement funds and health care premiums (since they’re taken out of my paycheck before I even see the money) and personal savings.

So here’s the breakdown:

Home: This category included rent, utilities, household items, laundry money and (last year’s) moving-related expenses, which will probably be replaced with home maintenance this year.

Groceries: Yup. This is just our grocery spending (as you can see, dining out is its own category). I was honestly almost relieved that it wasn’t a bigger chunk of our overall spending. I realize, though: for many people that percentage is “a lot”. I mentioned before that we spent a lot at the grocery store, which I partly blame on food prices in California, but also: we like to eat and cook good food. I wrote about our grocery budget here. We meal plan, we do eat (organic) meat and dairy, we like to cook more complicated meals, and we like good coffee.  But for the record, we hardly ever buy booze (which can be expensive). Still, my goal for 2016 would be to push that percentage down just a bit (as a challenge).

Dining Out: We get (cheaper) take-out maybe once a week or every other week, we go out maybe once a month.

Travel: Since my parents visited last summer and we went on a big 3-week adventure, I am not surprised that travel made up a larger chunk of our spending last year. But travel is always worth it.

Personal Care: This category includes all toiletry items, makeup, haircuts, and pedicures.

Shopping & Misc:  This includes all expenses that didn’t really belong in any other category, e.g. impulse purchases,  work lunches, annual membership fees, and parking. I realized that I also stuck many purchases in the ‘Shopping & Misc.” category, whenever I didn’t want to think about where a purchase actually might belong. This – in retrospect – was just the easiest solution at the time, but what I should have done is go back to reassign it to the correct category later (which I didn’t). So, some of the purchases in that category didn’t really belong there, but I didn’t have the time and energy to figure this out for all of our 2015 purchases (putting together this pie chart took me long enough – haha). 

Cellphone: This one got its own category because man, cell phones are freakin’ expensive and it shows in my pie chart. I should add though that I am paying for a family plan with four lines and that I have successfully lowered a big chunk of our bill late last year, so I am hoping for this category to shrink in 2016.

Entertainment: This category includes Internet, cable, and our Netflix subscription. Even though it’s “only” 4% percent of our spending, I know that if we gave up cable, we could easily save some money here.

Donations: I wish this category was a little larger, but I am glad it’s even showing up percentage-wise on this pie chart. Always room to improve!

Transportation: Since I live close to my work, our transportation costs (mainly gas and bus fares) and car upkeep were a fairly small expense last year.

Health and Fitness: This category includes my gym membership and our medical and dental co-payments.

Gifts: This is a pretty straight-forward category and it includes birthday gifts, Christmas gifts and ‘just because’-gifts for family and friends. I like to give gifts.

Looking through our spending and trying to consolidate it into categories definitely has given me some food for thought on how I want to organize our budgeting categories better this year.  As I mentioned, many things got put in the “Shopping & Misc.” category, even though they probably should have been recorded elsewhere. I definitely want to be more mindful about this in 2016.

I think the biggest areas of opportunity for us to make some changes are groceries, our cell phone bill, and entertainment. I realize that those are not all the biggest pieces of our pie, but they’re areas where I see some “easy” savings. I also don’t expect for the travel category to be that big in 2016 (although travel would not be something I’d necessarily want to cut out). I am, however, curious to see how home ownership will shape our spending this coming year.

I hope this post was at least remotely interesting for you. I personally enjoy these kind of honest posts.

What is the biggest piece of your spending pie? Do you have a budget and/or track your expenses?