Who is ready for a slice of money pie? As you may know, I always do a debrief with myself at the end of each year to see where all my money has gone! I also do a quarterly net worth statement just to get a read on where things are, but I will not be posting that here! :)
In 2023, I am happy to say that I decreased my overall spending from 2022 by about 12% and came in below my yearly (8 year) average by about 9%. The main drivers of this decrease were the travel and home categories, which I will talk more about below.
Here are the categories in the order of largest percentage to smallest.
Home: 63.2%. Interestingly, last year my home category was 63.7% of my overall spending and in 2021 it was 64.1%, so I guess no matter how you slice it, the home category continues to be almost two thirds of my spending! This category includes mortgage, utilities, taxes and insurance, as well as other misc. items, such as home improvement, maintenance and furnishings. 80% of this number is mortgage and property tax. You may remember that I mentioned last year about how I was paying a little extra into my mortgage? This year, given the good rates on cash, I stopped doing that and put the money into high yield savings instead. Due to this, I decreased the actual dollar spending amount in this category by about 13% from last year.
Transportation: 12.2%. This normally includes Lyft/Uber, public transportation, car insurance, maintenance, registration, gas, tolls & parking, but this year I added bike maintenance and parking fees to the category as well. Despite commuting by bike from July to December, I still had public transportation costs, but the main culprit in this category was body work after my car got broken into. I also got four new tires for the Red Rocket and did a full body tune up on Bertha.
Travel: 6.6%. This category includes airfare, car rental, lodging and any groceries, dining out or transportation incurred while traveling. Although I did not travel internationally and much of my travel consisted of tent camping and eating my own meals, some of the other costs incurred during travel were quite expensive this year. I went to Alaska, and the rental car alone was about $1,500!! It was an SUV though and we actually slept in it several times, so saved on hotels, thank goodness. However, even with this, I spent about 50% less on this category than in 2022.
Misc.: 4.4%. This category includes gifts, haircuts, legal fees, fees for credit cards, tax prep software and education expenses. I had to pay for my yearly CFA dues, legal fees to set up a trust and annual credit card fees, but other than that, the bulk of this category was for gifts! (PS no haircuts in 2023 😊)
Groceries: 3.7%. This category went down by 38% from last year, mostly due to the fact that part of my purging process was to stop buying new stuff until I had used up older stuff! I would say that I did a pretty good job and have had fun being creative with cupboard items, but I still bought the regulars like butter, eggs, fresh veggies and cheese. My other saving grace for this category was less trips to Costco and/or only allowing myself to buy what I went in there for! I do have a tendency to grab yummy looking things oh a whim, but this year I put a stop to that! Funny though, out of my six visits to Costco, I bought tortilla chips on five of them. Some habits you just can't break.
Dining Out: 3.5%. This category includes eating out, coffee and booze. This one is a little misleading this year, as I decided that in an effort to spend time with people and have experiences rather than buying more things, I would enjoy meals with them! Given this, I bought meals for friends several times. I could technically call this "gifts," but for now I am going to leave it as dining out. However, it does inflate this category a bit, and I had a 200% increase over last year.
Entertainment: 3.1%. This category includes music, theater, sporting events, cycling and running & camping expenses. In 2023, I went to two shows (Les Mis and Book of Mormon), a couple of sporting events, but my biggest categories for this are still running (32%), hiking (20%) and cycling (19%). My biggest purchases were race fees (three races), a new GPS watch and a new rain jacket.
Health: 2.6%. This category includes health insurance, out of pocket costs, massages, medicines and vitamins etc. This year most of my visits were covered as preventative, so the bulk of this cost is the insurance itself.
Shopping: 0.8%. This category includes toiletries, clothing, misc. home items & appliances, electronics and books. Basically this year I bought three things in this category: a new camera, a 3-pack of underwear that I hated and feminine products. Trying to purge more has really made me think about things more before buying. Also some of the camping etc. items I did buy are included under the entertainment category.
I do also put some money aside for investments and saving each year, but since this money is not yet "spent" I do not count it in this analysis. I also do not include income taxes, but if I did, they would probably be my highest category! However, since I don't have much control over them, I am going to leave them out for now.
Do you do a yearly review of your finances? Do you have a budget? What is your biggest spending category?
Aw yiss, I'll take a slice of that money pie!
ReplyDeleteI only started monitoring my spending this year and the only reason that I did it is because as you know, my career ambition at this point is to stop working. I haven't done my final numbers yet, but probably the only thing that I tried to limit was spending on Amazon and Costco. I know that I spend a ton of money on food, but I'm feeding two teenagers so that's just the reality right now.
I don't want to think about how much I spend in taxes. Sigh, it's just the cost of having a job.
Oh yes, taxes are fun eh! But don't you worry, I am working on a plan to avoid them in the future! :) Let me know if you want me to write a post about that, as I feel that I may bore the socks off of some people with the subject.
DeleteFeeding kids is expensive! I can't believe how much my friend's 13 year old eats. She has a smoothie or a snack when she gets home from school at 4 and then still sits down and eats a full dinner at 6! I always am thinking, "don't eat that; you will ruin your dinner" but she never does!
I. LOVE. THESE. POSTS. (Not quite as much as decluttering, maybe because I'm horrible with Math, but almost as much).
ReplyDeleteI track our expenditures monthly and have a sheet at the end of each year that tracks the monthly averages + yearly total. I also track our investments, remainder on our mortgage (10 MONTHS TO GO!!!), kids education savings investments etc. So in addition to expenditures, I have a pretty good grasp of net worth.
It's a bit tedious at times, but worth the effort because I really do appreciate being able to look back.
Hopefully this year will be a "cheaper" year. I had eye surgery (paid OOP), a wisdom tooth, and we put the big downpayment down for our daughter's braces. We bought a used vehicle, and did some biggish renos. In 2024 none of those things will be happening (plus, when we're done our mortgage in Oct, that means we suddenly have those bi-weekly payments in our coffers).
That is great that you are almost paid off on your mortgage!! Like I said, I decided to put it in savings and keep the difference this year, but most years that does not work as well!
DeleteI bought my car in 2016 and it definitely skewed my "transportation" category, so I will often run an average and will have both with and without the car. However, I feel that this is something that does happen every 10 or 15 years and so it does need to be factored in at some point. However, using a three year average and including the car doesn't make sense for LT planning.
I enjoy looking back and I think it's important to know where you stand. I also have all kinds of other trackers (retirement, contributions - how much and when and how, budget for future etc.) and really enjoy looking at them each quarter and dreaming and planning and adjusting!
Look at your pie chart. I love hearing how other people spend money. I truly don't understand how your grocery budget is so low, though! Our grocery budget is almost equal to our housing budget. (Okay, it's not. It's about half our housing spending, but it's still A LOT.) I feel like I need more secrets as to how to keep this cost so low.
ReplyDeleteI have all of the secrets! Actually I think I wrote a post about my grocery habits https://travelspot06.blogspot.com/2023/05/the-money-pie-deconstructed-groceries.html but basically the gist is that I buy staples like beans, rice and potatoes in bulk maybe once or twice a year when I find them on sale and then I search the coupon pages and buy meat in bulk also on sale but more often, like maybe once a month, and then I buy fresh items like eggs, milk and veggies once a week or every two weeks (or in bulk for some if it is on sale!) So I guess the short story made long is that I buy 75% of my items during sales and 25% when it's fresh/in season. Or maybe my housing is just a lot more expensive than yours so it is skewing the pie!!!
DeleteI'm posting my spending review on Friday! You know we paid off our mortgage so house is only 2% of our spending! Our biggest expense was car and transportation (it's one category for us since we don't take public transit anymore (busses never returned to our neighborhood post-pandemic)). We bought a car and quickly paid off the loan. We sold my Camry so that offset some of the expense but it was still expensive to buy a Rav4. We are happy w/ it, though, and we shouldn't have to buy another car for a very long time. Our 2nd biggest expense was daycare.
ReplyDeleteOur expenses did not decrease this year. They increased but most of the increase was driven by the car purchase.
I can't wait to see your spending review! Like I said to Elisabeth, I bought my car in 2016 (for cash) and that year my transportation category was out of control! However, I do like to look at the average spend and I do one without that year and one with, just to see what it looks like both ways. I think maybe next time, if I can plan it better, I may split up my total car amount for 10 years or something, as it needs to be factored in but it really messes up the one year. I need it to be more smooth! I will be curious too see how you do yours. I am also curious: if you did not buy the car would your expenses have been lower? I think yes, due to Paul being in real school now? I know K said she was saving boat loads when the kids finally went into Kinder, even with after school care costs! Of course now there is soccer and flute and.... so it will add back up eventually!
DeleteSo interesting! I can't get over the fact that you only bought 3 things in the Shopping category?! A goal for 2024 of mine is to get back into closer spending tracking. How do you track your spending each month? Do you use a software or just go through your credit card/bank account statements and pull it out manually?
ReplyDeleteHa! Well don't be too impressed; I do categorize some of my shopping, like running shoes or camping gear, under "entertainment." I love spreadsheets and I like having control, so I pull my bank/credit card statements and categorize them myself. However, if you are just starting or do not want to do too much work, I would suggest something like YNAB or Mint, where they do all of the heavy lifting for you. You can also recategorize certain things (like mine with shopping vs entertainment) but I haven't really delved too much into what all of the features are, as I already have a kick ass spreadsheet that has formulas and it pulls everything together just how I like it.
DeleteI keep a budget, but I need to alter the categories so they line up with our banks categories. We have to provide them with our expenses each year for my husband's business overdraft and it's a pain to have to sift through it all into their categories. Our biggest category was home stuff this year because, mainly because we bought or installed a few things in our new apartment but I expect that to be much lower next year. We downsized, so no mortgage which is great. The next biggest expense was travel and that will probably decrease this year because our overseas trip to Israel is now cancelled.
ReplyDeleteThat would be a pain, although you may be able to set up an Excel sheet where you can import your things and then it will "recategorize" them according to your bank's categories... That is kind of what I do, as I don't love the way that the CC companies categorize my stuff sometimes. Home always tends to be my biggest and I swear that if its not one thing, its another. This year I will probably paint the exterior and so even though I may be saving on mortgage or somewhere, they (the home gnomes?) will get it one way or another. Good on you though for paying your mortgage off! That is the biggest part of my home slice, so my expenses would go way down without it (although taxes here are nearly as high!) Sad that Israel is not going to work out, but maybe you can find an alternate!?
Deletevery interesting post! i do my yearly/monthly finance review and travel took 30% of total expense. note that we don't pay for housing, thus that's a big relief. the second largest category is kids activities which does not include school fees. I'm surprised to see little in travel although you seem to have traveled a lot last year.
ReplyDeleteYeah, kids expenses can be so expensive. I think daycare here is about $2000 per month, so having a kid go into Kindergarten can save you a lot of money. However, there still the cost of after school care and then if you put them in sports, music, theater etc. those costs are pretty expensive too!
DeleteRe travel, I did go to Alaska and Washington, but did a lot of camping and home cooking, so did not spend too much on those. I also went to MN but stayed with Lisa and went to AZ but did a backpacking trip. So aside from the cost of flights and gas, my lodging was pretty cheap!
I love posts like this! And this is suuuper interesting because we are so very different in the way we spend money, lol. Like, my food budget is always the #2 expense for me over the year because I spend a lot of money on Ubereats, lol. But then I spend $0 on stuff like running/hiking/camping gear. Different priorities!
ReplyDeleteDo you cut your own hair? How did you go the whole year without a haircut?!
I do cut my own hair, and/or I go to the beauty college, which costs like $15 + tip, but honestly when my hair is long, I just do it myself. When I am ready to chop, that is usually when I go to the hairdresser. I am not vain about my hair at all and my normal routine is to grow it long, chop it, donate it and then do that all again.
DeleteYup, we definitely all have different priorities. I have never used Ubereats and I never get takeout. My dining out is all eat in/sit down restaurants. For me if I am going to eat at home, I may as well make my own food. But that is just me!
Home is by far the biggest spending category for my household. This year, our spending on transportation jumped too because I had to lease a new car and the rates were more than double what I'd been paying. (And it's not like I even got a luxury vehicle or anything! Same category of car!) I would guess that food is another massive chunk of our spending, too. But we don't do a tidy spreadsheet, even though I think they are such a clean way to see how your spending breaks down.
ReplyDeleteThe Home category really does get out of control sometimes! It feels like even when you are finally at a point where you are spending less on one part of it, something else comes up! In 2022, I had to have an arborist come out and it was a huge project and an expensive one! For tracking, you could always use Mint or some sort of aggregation software which would pull all of your info together for you. It's pretty painless and if you don't really care how they are categorized, they do a pretty good job with it.
DeleteI'm intrigued that your grocery spending went down so much! That is a huge expenditure for us, and I think we could be doing much better. Every once in a while I"ll refuse to go to the store and insist we just cobble together meals from what we already have, but I should make that a more regular thing.
ReplyDeleteInteresting that you put running and hiking in the "entertainment" category. Although I guess I'm not sure where else I would put it- health?
Out biggest category in 2023 was definitely "home."
I think cobbling together gives you a chance to use things up before they go bad! Maybe you can have one day a week or one week a month that you have to use what you have? I do that a lot but with the exception of maybe milk and eggs sometimes. Home expenses are expensive, but will hopefully pay off at some point, right!? Plus we have to have a roof over our heads, so it's kind of a non-negotiable item.
DeleteI think cobbling together gives you a chance to use things up before they go bad! Maybe you can have one day a week or one week a month that you have to use what you have? I do that a lot but with the exception of maybe milk and eggs sometimes. Home expenses are expensive, but will hopefully pay off at some point, right!? Plus we have to have a roof over our heads, so it's kind of a non-negotiable item.
DeleteYou know I love looking at these pie charts and I am planning to post my own again this year (after I completely skipped it last year - well, I had the report but never put it together in a post).
ReplyDeleteWhile I understand why people don't post actual numbers, I am always "shocked" how small the percentage for groceries is in other people's budget (and I am wondering if it's just so much larger in ours because we have fewer categories or less expenses in other areas - because with percentages, it's all relative to ALL money spent).
My average grocery bill is about $300 per month, but this year I spent less than that, mostly due to trying to use up what I had more. I had an overstock of beans and pasta and things like that, which I tend to buy in bulk, so in 2023 I tried to use up some of these stores, hence the lower amount.
Delete