I am jumping on the bandwagon. I previously shared my ‘end of year’ spending report with you, but it probably is more insightful to give updates along the way. Because if one thing that I mentioned in my budgeting review is true, is that your spending will shift throughout the year. I’ll explain what I mean in a second.
I wish I could be a bit more transparent about actual dollar amounts because I think that would be really, really helpful, but I haven’t worked up the courage (yet). Also, there are so many floating pieces that people include or exclude in their budget and so it’s really hard to get a complete picture.
I personally think you should always budget with your net pay, although that can vary tremendously depending on what your pre-tax deductions are, and in my case, that means a huge chunk of money has already gone away to taxes, healthcare, and retirement fund before I even see it. My take home is 59% of my gross pay. That makes a big difference, doesn’t it? I mean, I would love to have a bigger chunk of my money to take home, but I am also trying to maximize my contributions. What’s the percentage of your take-home pay? Do you prioritize deductions for life insurance, healthcare, and retirement?
When finance articles say that you shouldn’t spend more than 30% of your income on housing. Does that mean 30% of your gross or net pay?
Also, does 30% mean “just for rent” or does it include all the other expenses that come with housing (like utilities, renter’s insurance and/or taxes, home improvements, etc.)? Most finance articles are not very clear on that. However, what is pretty clear is that 30% for someone on a lower income is a lot harder to handle for someone on a higher income.
We should discuss these aspects a little more, but maybe we save this for another post. Back to the quarterly spending summary.
As you can easily see from this handy pie-chart (which I pulled out of YNAB), more than half of our spending in quarter 1 of 2018 went to our home and car maintenance. Ouch. That hurts a little. I have more subcategories that I track separately in my budgeting software, but I consolidated them a bit for the purpose of easier visualization. As a reminder: these are percentages based on money spent, not based on my (take-home) income.
Home (30%) – The spending for our home includes mortgage/taxes, utilities, and maintenance cost. We also had a minor repair earlier this year.
Car Maintenance (29%) – We had an unexpected car repair, we had to buy new tires and our 6-months car insurance and registration was due – all in the first three months of 2018. Fun! This is why it is so important to budget for these kinds of things throughout the year because they can otherwise throw off your whole budget in a three months period.
Groceries (13%) and Dining Out (8%) – While I have brought down our grocery spending quite a bit, we still spend a larger percentage on groceries than other people (from what I can tell). As you can see, it’s also separate from our ‘dining out’ category. I will say that we ate out a bit more than usual in the last few months and I am hoping to reign this in a bit in the second quarter.
Cable/Internet (4%) – Yes, we still pay for Cable and Internet is not cheap.
Cellphone (2%) – Self-explanatory.
Health & Fitness (4%) – This category includes my gym membership, my Runtastic subscription, and our medical and dental co-payments. I didn’t include our health care premiums this time because they come out of my paycheck pre-tax, but wondering if I should?
Subscriptions (2%) – This includes Netflix and a few annual subscriptions that are due at the beginning of the year, like Amazon Prime and MLB TV.
Gifts (2%) – Birthdays, mainly.
Personal Care (2%) – This category includes all toiletry items, makeup, and haircuts.
Transportation (2%) – Gas and parking fees. Everything else car-related went into the car maintenance category.
Misc (1%) – All the spending that doesn’t really fit into other categories, e.g. our identity guard monthly fee and other purchases.
Household (1%) – Household items. Everything from toilet paper to laundry detergent to cleaning items.
Clothing (<1%) – Did not spend much on clothing at all. It barely made this list.
Travel (0%) – No expenses for travel in Q1 of 2018. Sad face. I mean, I did spend money on my flight home (that I had to cancel), but I still have the voucher for the flight, so I’ll count this when I use it.
Where did most of your spending go in the first quarter? Did you have any unexpected expenses?