2017 Expenses – Year in Review (with some budget for 18)
I’ve read a quote that went something like this: “You can’t manage what you don’t measure” (I believe it was Peter Drucker, but I couldn’t find the actual quote). One intention behind this website is to expose the choices I have made, to learn from them and adjust as I move forward. I hope others can learn and benefit as they follow along as well.
In the spirit of learning, measuring and attempting to move towards managing my finances properly, I have categorized my 2017 expenses by month. I have typically not tracked my expenses during my income earning years. It is a lot easier to hit loose objectives and convince myself I am doing alright, so I have taken this easier (in the immediate) yet less instructive track much of my life. Currently, I’d rather set a goal/objective and fail but be heading in the direction I want to go (getting to FI), instead of general goals that are not measurable. So it’s time to get specific.
Tracking my expenses has elucidated categories to focus on reducing spend. I have excluded the truck payments in 2017 from this data to set a similar foundation for the 2018 budget (which will hopefully not include a vehicle payment).
Below is the breakdown of my spend by category with the comparison of my budget. The green line items are highlighted as I have already hit those targets/reductions to the budget. I canceled my payment to the Krav Maga gym (sad times) for $145 in per month savings, and I prepaid my 2018 charity in 2017, so that is not a budget line item (the prepaid ’18 portion is not included in the ’17 actuals). The yellow highlight is called out because that is where I need to focus!
The main areas I have targeted for 2018 are misc ($824 to $500 per month…but I’ve excluded it from this target budget of $3,080 per month as I don’t see those are recurring. I have $5,000 slush fund however for the misc payments), entertainment $282 to $100 reduction) and clothes ($395 to $50 per month). The entertainment was dinners mostly, a couple concerts and some recreational activity (camping, state park fee etc). Clothes clearly needs to get reigned in. I believe it was in “Set For Life” by Scott Trench that he outlined the general spend by category in a pie chart and talked about prioritizing based on spend. I could focus on the cup of coffee I am spending, but as a percentage, that isn’t going to provide that much of a difference. Laying it out like this, I can identify the bigger opportunities to reduce spend in clothes, transportation and housing. Household and groceries are the biggest and worth evaluating as well but are less elastic.
The Household and grocery budget is increasing by a percentage (below: compared to the actual above) because the line items have decreased for all other expenses. I mostly kept household and grocery expense constant, but reduced the other line items, increasing the percentages in the pie chart below.
Any insights or areas you think I could improve? Let me know, drop me a line. In the meantime, I am working on reducing my spend from $53k per year to $40k (realistically).