A key to reducing expenses and saving money, at least to start with, is to track your spending. I’m sure you’ve heard it said a million times. So now that we’ve been tracking ours for a few years, I have enough data to demonstrate to you that it genuinely works in the real world.
Being a bit of a finance geek, I keep quite a close journal of our expenses. It won’t be perfect as it’s more or less an export of the categories from our bank’s online tool (ASB). For example, if we spend $100 at the Warehouse and $80 was on clothes and $20 was on groceries, I have to classify the whole purchase as one or the other unless I want to annoy the cashier and do two separate transactions.
But as I’m consistently using the same tool from one year to the next, the margin of error should also be more or less consistent and thus the story of how our expenses are changing year-on-year should be fairly reliable. First the raw data. Here’s a chart of how our expenses have changed since I started tracking them closely. The figures are the average fortnightly amount (I do all budgeting based on my pay cycle).
|Clothes & Grooming||$41.00||$16.85||$36.42|
|Food & Groceries||$391.45||$379.85||$338.38|
|Gifts & Donations||$59.27||$35.62||$14.35|
|Total sans Holidays||$1,359.36||$1,193.78||$1,072.65|
|Saving vs. prev year||$4,305.08||$3,149.38|
In the spreadsheet I normally use it’s all nicely colour-coded, green when we reduce an expense, red when it increases. But the above table is enough to give you the general idea.
First up, there are a couple of obvious sore thumbs sticking out here. In 2018 we had two international trips. A planned one to Fiji for a week, which was mostly paid for in 2017 when we booked it. And a spontaneous one to the Philippines when Mrs. R2A’s father passed away, which was paid for entirely within 2018. So you can see there the huge amount from 2017 becomes almost nothing in 2019 when we took zero international trips, just a few nights away to Taupo.
As a side note, though we spent an average of $736 per fortnight on travel in 2017, there’s no way can afford to put that much aside each fortnight. It took us a few years to save up but all the spending happened in 2017. That’s just how the math works out.
I’m pleased that our dining out expenses has decreased year-on-year. It’s still our weak spot and we spend more than we want to. Ideally we’d probably halve it still from what it was in 2019. But to see it still reduce despite being a weakness was a nice surprise.
Gifts and donations have decreased year-on-year, which is very much not a good thing. We actually want our giving to remain stable or increase annually, so we’ve not done a good enough job of being generous, something to change for the better this year. To be fair on ourselves, it doesn’t include giving that’s not really accounted for, such as Mrs. R2A’s family living in the Philippines house at heavily discounted rent. Though we own that house freehold, we increased the mortgage on our house in NZ to buy it, so we’re kinda paying a mortgage on it, which is much more than the rent we’re getting. But ultimately it’s hardly like we’re gonna lose money on it. So it’s kinda giving, kinda not.
Entertainment spending has been surprisingly consistent, despite the sporadic nature of going to the cinema, or signing up to and cancelling subscription services.
We’ve also managed to reduce our grocery spend a little bit each year. Some of this has been due to becoming more sustainable and substituting disposables for reusables – I can’t remember the last time we bought a box of tissues or a pack of paper towels! Some of it is just trying to eat less, because I’m not exactly losing weight right now (but really should be).
Home Expenses is a very odd category that a lot of random things fall into. Need a new cheese slicer? Home Expenses. Hiring an arborist to grind a massive stump? Home Expenses. Builder coming to insulate a wall? Home Expenses. That last one happened in 2019 but was mostly paid for in 2020, so already our home expenses for the year are set to surpass last year by a decent margin.
We’ve managed to reduce insurance consistently by raising our excesses as we have more investments in reserve to draw on if something unexpected happens. We’ve also gradually reduced my life insurance cover as we pay off the mortgage, among other things.
Most of the reduction in utilities costs has been phone plans and electricity. Mrs. R2A is now on a $10 per month prepay plan instead of a $30 per month post-paid plan. That’s one of the perks of someone who doesn’t use much data 🙂 And we’ve tried to use our dryer less and open windows instead of switching on the air conditioning, stuff like that to reduce our power bill.
Transport is largely a fixed cost for us. I do the same commute so spend roughly the same on petrol each year. Same for WoF and registration etc. So I’m not sure why 2018 was so much cheaper than the years either side. Possibly we spent less on servicing and maintenance that year.
There are some expenses I haven’t included as they’re not things you can really be frugal about to the same extent, e.g. mortgage, council rates etc. So I don’t bother measuring them. But as you can see from the expenses I have measured, over a period of two years we’ve reduced our annual expenses by over $7000!
Hopefully that’s an inspiration to start tracking your expenses if you don’t already. You don’t necessarily have to do it forever. Just until you form new habits and are confident that you’ve optimised. After that point it’s more about checking in once in a while to make sure you’re not succumbing to lifestyle creep. At least not accidentally. If you make a deliberate decision to spend more on something, fully aware of the consequences and having weighed up the value, you shouldn’t feel guilty about it!
How about you guys? Got any tips for being deliberate about spending?
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