Sunday, October 8, 2017

Family budget 2017

This is 9th year we are keeping our family budget formally, recording every expense and trying to make sense of it all at the end of the year.
Family budgetting for 9 years. My open wallet, true and honest discussion about finacial independence.
 Overall: Almost in every category we exceeded our budget from previous year, but also from 6 year average almost in every category. Inflation (officially reported as 3% last year but with british pound collapsing 20% to US dollar feels more. Additionally, looking at energy prices – over 25% increase from 2011).

     Detailed analysis of the family budget per category: 
Home - Last year we planned to use freed up money from education to start paying ourselves by buying a house. This was an emotional move, as the results  we are spending 5,000 a year more than a year before. Out of overall mortgage payment 12,000 a year are going to the principal (i.e. we paying it to ourselves).
     Bills -  combined heating & electricity went down from 161 a month to 126 and no external housekeeping - 120 a month., however council tax is higher by 20 a month and there were new bills - home insurance – 173 a year. Overall saving 718 a year. Next year energy savings from improved loft insulation will offset increase in domestic energy prices.
      Cars – significant difference from 6-year average, as we have 2 cars now. From the last year car insurance slightly went up, as annual service plan for an ageing vehicle is 20 a month more expensive than a year before. We also had to replace car tyres and there were couple of minor incidents (proximity switch and broken glass).  Gasoline consumption went up by 405, as now there is two cars and I am using mine to drive to work. New car is less fuel efficient than old one.  Next year there is potential savings on having incident free with the cars. 
     Kids: Second child is growing up - birthday party alone cost 500. December month was 500 more expensive than in 2014.  Education savings of 4,000 were expected, as both are going to school now. No change for the next year.
     Miscellaneous: majority of expenses are one off and the money were spent on moving the house and cleaning. Increase of 600 a year. Opportunity to reduce next year by 200-300.
     Home: significant jump of 5,800 to 8,131 a year. Having our own house, we have flexibility with improvements and renovations.  The main expenses were:
Rugs, furniture, lights, vacuum cleaner, curtains - 1,120; garden (including specialized driveway paint -240) – 1,190; Loft insulation 1,140; taps and fittings – 693; new speakers - 700; new sofa - 600; home office – 600; Paint, oil - 500 (upstairs floors before carpeting and loft). These 8 categories consumed 6,500.
It could look like that some of the items are one off purchases, but it would be reasonable to assume that the house improvement project will continue: new entrance door, gardening, ongoing maintenance and so on. Opportunity is to curb emotions and save 5,000 by returning to the 6-year average of 3,000. 
     Joy – in spite all of the temptation a very significant amount of money was spent. Sea holidays - 2850 (with almost free tickets), December – 803, Somerset trip – 301.  These three items are 4,000 the rest of 3,000 are scattered over 12 months at 250 a month.  
   New category – commuting 2,000 much less than estimated as I spent only 11 weeks doing it out of 48 (I travel about 27 weeks a year aroud the globe). Commuting expenses could go up.
All together opportunities to reduce expenses next year on  cars, miscellaneous and  home could result 6,000 savings. 

I invite to have a look at percentage per category comparison new locations vs. old one. Real life example comparison Chicago vs. Oxford based on 9 years’ average (living expenses comparison between the USA and the UK):
Cost of living the USA vs. the UK. Where is more expensive to live in Chicago or Oxford? Real family money
It could be clearly seen from personal prospective, why consumer oriented economy flourish in the USA and not so much in western europe  on mortgage and bills we spent almost 38% of our combined income vs. 26% in the USA. On average, we were spending 3 times more on clothes  and 2 times more on miscellaneous (i.e. electronics) in the USA than in western europe.
How was your last year budget? How do you keep track and manage your expenses? 

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