Tuesday, October 2, 2018

Family budget 2018 – Family budget over last 10 years

This is 10th 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. I am glad that we started running the budget and has kept it for 10 years. This provides a lot of wonderful insights and I wish there would be more sharing on the web, information like this.
My open wallet - family budget - expenses. Honest view.

This year I deliberately did not set a target for my family budget in myannual goals. Instead I focused on the savings (which I am achieving).  Looking back, it is not an optimum approach as I need to keep lid on the expenses as well.
     Almost in every category we exceeded our budget from previous year, but also from 7-year average almost in every category. Inflation (officially reported as 3% last year but with British pound collapsed to most of the world currencies the actual inflation is way more. The government is doing it part too by aggressively increasing local taxes well above inflation).  

   Detailed analysis of the family budget per category: 
Home – We keep paying off the mortgage and even manage to make 3 additional monthly contributions using an unexpected bonus at work. My monthly payments will remain the same. If I manage to accumulate additional money I would rather pay off the mortgage quicker.
Buying a house is an emotional move and economically it does not make sense. We putting a lot of additional time and money by doing some never ending maintenance on the house.  As an example I am spending $600 a year and two days to clean and re-paint my driveway. This keeps it going without need for replacement so far (new one cost over $15,000 in our area for 900 sq. feet). 
     Bills – I got rid of our internet provider as loyalty does not pay. The price went up from 35 to 65 a month in last a few years. I cancel it and found new one at 35 a month. Quite happy with the quality so far.
Energy savings from improved loft insulation is indeed paying  off.  Electricity and natural gas prices went from 115 in 2016 to 162, while consumption remained the same (meter wise) but at least we could have the warm house (local keep them at 60F in winter).  Most of the rise went from local taxes on the house (~8% rise).
       Cars – significant difference from 7-year average, as we have 2 cars now.  Car insurance remained the same but servicing older car is more expensive.
     Kids:  Could have been lower but secondary school is focused on entertainment rather education. First year parents are expected to pay for trips to France (twice), Switzerland. This alone added almost 1,000 so far with regular payments coming.
     Miscellaneous: There was some camping equipment around 500 and one off spent of 3,500. Expect to go back to 3,000 next year.
     Home: significant reduction to 5,100 from 8,100 last year.  Half of the sum is new entrance door ~ 2,400. Expect to remain the same and continue with the ongoing maintenance /improvements projects.
     Joy – had an overseas vacation – 9,500. No particular regrets I wish I could afford to do it every year (same quality).  As part of the new year resolution I stopped drinking alcohol this year and so far it works quite good. No significant reduction in expenses as cost of wine went up and started buying more expensive bottles for my wife.
Commuting – was quite low, as I had to take some additional business trips. There has also been a significant office policy change, where people do not have permanent desks any more and it is on a first came first served basis. Very inhumane approach, degrading any sense of community.   

For people who enjoy pie charts here is one (percentage per category):
Pie chart of family expenses between 2011 and 2018 - http://niterainbow.com Copyright

Overall: Next year I expect the expenses to be under 80,000 with a stretched target to be as low as 75,000.

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 10 years’ average (living expenses comparison between the USA and the UK):
Real life cost of living comparison the USA vs. the UK (Chicago vs. Oxford)
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. This is improved, as we spent over 6,000 on efficient central heating, loft insulation and new entrance door. 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.  The kids chart is not entirely representative as the kids left nursery in the Western Europe and going to a free school. 

How is your budget doing this year?

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