Brain dump III – New Yearly Budget
Jan27
Welcome to brain dump part III! This isn’t really a brain dump as such but it is vaguely related to the other two posts which were about Expenses and well, me and the blog I guess. I realised long ago that the £10,000 per year target spending I set out 1.5 years ago was a little over optimistic for us. 1 However this is not to say it can’t be done, as I’ve had many emails from people saying they are living on less than that, and in the comments there are other examples.
So after tracking 6 months of spending and getting a much better idea where our money goes I thought I better redo a more realistic yearly budget for us. Here is it!
Yearly Budget Overview
| Item | Cost | Per Month | Notes |
| The Fun Stuff | £11,652.00 | £971.00 | 1 |
| The Boring Stuff | £20,341.00 | £1,695.08 | 2 |
| Total Core Budget | £31,993.00 | £2,666.08 | |
| Big One-off expenses | 3 | ||
| Bathroom | £2,500.00 | £208.33 | |
| Small Kitchen Revamp | £1,000.00 | £83.33 | |
| Garden bits | £500.00 | £41.67 | |
| New Boiler/ASHP | £6,500.00 | £541.67 | 4 |
| Total | £42,493.00 | £3,541.08 |
Notes:
- Fun stuff = All “non-essential” expenses. Obviously this is subjective but I’ll break the category down in a minute so you can have a gander.
- Boring stuff = I guess this is the budget we could live on if we didn’t do anything else which required spending money. And it includes £10,116 worth of mortgage payments per year! It is quite comforting to know that you could theoretically live on so little, should the shit really hit the fan.
- There was a bit of discussion in the comments of the expenses brain dump about one-off expenses. The conclusion is that you obviously include them in your expenses, money spent is money spent, the definition of an expense! However I will not be including these three items into my yearly planned budget because in the Total Core Budget I (think) I’ve left enough wiggle room to cover other smaller one off expenses anyway. But I’ll let you be the judge of that.
- A new boiler would be nearer £4000. ASHP means “Air Source Heat Pump” – both are expensive but the next post will go over the cost/benefit analysis of both so I can try to work out what is the best option.
Breakdown – The Boring Stuff
| Fixed Monthly | Cost | Yearly | Notes |
| Mortgage | £843.00 | £10,116.00 | Yikes! |
| Council Tax | £106.00 | £1,272.00 | 1 |
| Gas & Elec | £60.00 | £720.00 | 2 |
| Total | £1,009.00 | £12,108.00 | |
| Yearly costs | |||
| Car Tax | £10.83 | £130.00 | |
| Car Insurance | £25.00 | £300.00 | |
| Car Maintenance & depreciation | £58.33 | £700.00 | 3 |
| House insurance | £8.33 | £100.00 | |
| Water Bills | £27.50 | £330.00 | |
| Landline | £15.00 | £180.00 | 4 |
| TV Licence | £12.08 | £145.00 | |
| Total | £157.08 | £1,885.00 | |
| Variable Monthly | |||
| Groceries | £250.00 | £3,000.00 | |
| Eye care | £32.00 | £384.00 | 5 |
| Dental | £20.00 | £240.00 | |
| Mobile Phone | £35.00 | £420.00 | 6 |
| Petrol | £82.00 | £984.00 | 7 |
| Public Transport | £10.00 | £120.00 | 8 |
| Home Maintenance | £100.00 | £1,200.00 | 9 |
| Total | £529.00 | £6,348.00 | |
| GRAND TOTAL | £1,695.08 | £20,341.00 |
Notes:
- This is lower than when we were at the flat, which is a bit strange but I’m not complaining!
- This does not include the offset from our solar panels, which will appear on the income side of the sheets. Generation payments are completely separate from what your usage and bills are, as far as I can work out so far anyway. We’ve only had one generation payment! I’ll do a post this summer, after we’ve had a few better months of sunshine on how much those babies are generating!)
- We’ve nearly blown this budget already this month, so I am hoping for a trouble free year for the rest of 2015! (Again, post coming up on this one!). Maybe a bit optimistic but I am sure this will average out over the course of a few years. Our old car went 3 years without needed any work at all, for example.
- I still haven’t taken my own advice and paid up front yet to save a bit of extra cash on this, reminder to self!!!
- £22 per month for Mrs TFS contacts + random £10 per month for any glasses that break or eye tests. Has anyone ever had laser eye surgery by the way? And worked out the ROI on it? It is something she might consider if it works out well money wise.
- I have a work phone which I will have to replace at the end of 2015, so this could go up, but I am hoping to persuade Mrs TFS to extract herself from the teet of the Apple ecosystem when her contract is up in September. If she does and we both go cheap (but eminently usable!) Android then it should hopefully stick at the same level.
- We are running on about 1.25 tanks per month right now (although that did include our 1500 mile Scotland road trip, so it might come down in future if we don’t go on quite so long driving holidays again)
- This is just for when say one of us has to get a bus to work. Any taxi’s, trains etc… for nights out, that just comes under The Fun Stuff.
- I am hoping that this is enough to keep our home in ship-shape over time! We may spend less one year but can save up any excess for future expenses, for example.
Breakdown – The Fun Stuff
| Standard Monthly | Cost | Yearly | Notes |
| Gym | £18.00 | £216.00 | |
| Cinema | £10.00 | £120.00 | 1 |
| Squash | £25.00 | £300.00 | 1 |
| Clothes | £50.00 | £600.00 | 2 |
| Haircuts | £33.00 | £396.00 | 2 |
| Beauty stuff | £30.00 | £360.00 | |
| Charity | £20.00 | £240.00 | 3 |
| Total | £186.00 | £2,232.00 | |
| Random One offs | |||
| Running events | £16.67 | £200.00 | 4 |
| Concert or two | £12.50 | £150.00 | |
| Birthday Presents | £58.33 | £700.00 | 5 |
| Christmas Presents | £20.83 | £250.00 | |
| Booze Cruises | £16.67 | £200.00 | 6 |
| Gadgets | £16.67 | £200.00 | 7 |
| Sports Equipment | £8.33 | £100.00 | |
| Total | £150.00 | £1,800.00 | |
| Big Ticket Items | |||
| Golf | £100.00 | £1,200.00 | |
| Going out/dining out | £333.33 | £4,000.00 | 8 |
| Holidays/Breaks away | |||
| Holiday 1 | £91.67 | £1,100.00 | 9 |
| Holiday 2 | £58.33 | £700.00 | 10 |
| Cheap Weekend away | £15.00 | £180.00 | 11 |
| Dublin for anniversary | £33.33 | £400.00 | |
| Total | £971.00 | £11,652.00 |
Notes:
- Where possible I am overestimating: I would say that we’ll struggle to go to the cinema more than 6 times a year right now, which is what this works out too. Same with squash, I am getting about 3 games a month in (£15) but this allows for 5 games a month.
- Attempting a decent reduction in these categories compared to the last 6 months! Let’s see if
weahem, Mrs TFS, can do it. I believe in her! 🙂 - This should be more really! I am thinking I might do something like, if we come in under budget, I will split the excess 50/50 into Charity and contributions to investment accounts.
- Already signed up for two and have paid for them last year, so this allows 6-7 more running events, which I almost certainly won’t fill up that quota 🙂
- This is surely a massive over-estimate!? It is based on roughly doubling our 6 month spend of £368 but maybe it’s just most of the birthdays come in the second part of the year?! Who knows!
- Two booze cruises per year, normally spend around £100 each time including (free) ferry crossing, and alcohol. Lunch and Petrol are accounted for in other categories!
- Pretty sure we don’t buy much in this category anymore but will leave some leeway in here for it.
- This isn’t even that much of a cut from our roughly £2400 over 6 months spend, so I am really thinking we can beat this estimate!
- Spain for my mum’s 60th birthday. They are kindly footing some of the bill so it is working out pretty cheap (for us!). In fact I just realised I didn’t take that off, so unless we blow through about £700 in a week, which is unlikely for a family villa holiday with 4 other adults and two small children (I don’t think we’ll be having any boat parties or nights out in Manumission, Ibiza!) then it should come in under budget.
- We have friends in Madrid who are kindly going to put us up for a few nights, so again should work out as a fairly cheap break away.
- Bit extravagant really this one but we are having a one night break for our “meeting up” anniversary (does anyone else do this? Is it even a thing!? 2 🙂 ) but it ties in nicely with valentines day which works out well for us to celebrate both things at the same time. Mrs TFS booked it up and it’s a secret where we are going… exciting 🙂
Final words
My final comment would be, if you took off the big one off expenses and the mortgage payments we would be running at £21,577 per year. Which doesn’t actually sound that ridiculous, if we can stick to it!
What do you think peeps?! Do you think we are still not cutting enough and are spending like we’ve “made it” prematurely? Or do you think the budget is still not realistic enough and we will come a-cropper at the end of 2015???!
Notes:
- In fact if you read the comments in that post there were people picking holes in it straight away, and rightly so. ↩
- Just to clarify this is the anniversary of (roughly) when we met, which was the end of Jan/start of Feb. In the absence of a wedding anniversary for the first 7 years of our relationship it seemed like a pretty good thing to celebrate, especially as it was so close to valentines day, but now it seems a bit redundant. But then valentines day is then anyway so I guess it doesn’t really matter 🙂 ↩
Discussion (23) ¬
I think the cleanest way to present expenses is on one table with all categories listed in the rows, then one column for each months expenses. Once you have >12 months data then the final column sould be your 12 month average. By sorting by that final column you can then see exactly where your money goes and easily identify/target the big ticket items.
In your example you have going out/dining out listed under big ticket items. My guess is that this is a series of smaller regular payments!
That sounds like a good idea UTMT… I will have a go at building that spreadsheet up over the year. Thanks!
Yep obviously it is, or will consist of lot’s of smaller outgoings, I guess I just meant “categories that consume a lot of our money” when I say big ticket items.
Hi TFS, clearly you and Mrs TFS are enjoying life by the looks of your Fun Stuff – all you need is to balance this out with your FI aspirations and tracking it in detail like this will most certainly help you do this!
Is Mrs TFS sure that she can’t get her contacts any cheaper than £22 per month? I don’t wear my lenses every day, probably 2-3 times a week so I have soft, monthly ones. My cost is £24 per QUARTER – one of them is a Toric lens, which is supposed to be more expensive. I get mine from Boots.
Also, there are places on TopCashback that sell lenses, so perhaps regular cashback there?
Two of my sisters have had laser eye surgery – it wasn’t cheap but the benefits for them appear to be more for convenience, ie no more wearing lenses or glasses!
Anyway, good luck with the new budget! 🙂
Hi weenie,
She has tried looking around (Tesco… didn’t get on with them, headaches etc) but not in the places that you have suggested so I will inform her and we’ll have another pop at that one, see if we can get that down.
Thanks for the advice and yes I’ve heard the laser eye surgery is quite expensive. Ironically I’ve had it done for free, but that was because of that darn squash ball and it didn’t improve my sight at all… hah!
Cheers!
I bought a pack of lenses online from a local supplier and the prices were a fraction of retail. For the same product. It’s well worth shopping around.
Does your grocery line include any random toiletries or household bits too? Because ours is £230, including all our toiletries and household goods. There are two of us, our little one has his own budget line.
It should includes basic toiletries such as soap, toothpaste, deoderant, but nothing fancy. Plus food for dinner parties and so on. I am hoping to beat these numbers on many counts if we keep an eye on things, but I am just trying to be more realistic this time round and so have over-estimated and hopefully this is the worst case scenario. We shall see!
Spending of £42,193 per annum including home maintenance. That’s about £61,000 before tax for a single earner. That is a LOT of money. Most households in the UK come nowhere near this. You’re either on a very big salary or you have deferred FIRE.
Instead of preparing a big list and looking at what you can cut out/reduce could it be worth working on the assumption that you’re target is to spend nothing. Then add in the basic necessities – Maslow’s Hierachy of Needs could help here. Then settle on a maximum “allowance” (stopping you being 100% cold turkey) and choose those things which give you most reward per £. Once you reach your “allowance” you have to stop and see how it works for 6 months. Then in 6 months reduce the “allowance” and repeat. I used to consume like the best of them but I’ve now found that a lot of things that I value cost very little. End result, savings of 55% of GROSS earnings.
Good luck with it.
This is what I call, the ‘no-budget budget’.
Hello RIT, thanks for coming over to comment.
In answer to your points raised:
1. This budget is for two people. I think that was pretty clear from the post (I don’t and have never spent £30 a month on beauty products, for example) but then I don’t know why you’d compare that to a single persons salary, which seems a bit odd. Divided by two it equates to a ~£27K salary per person (see #2 below) and if you take out the ASHP (again see #4 below) it equates to ~£22K salary. (Unfortunately it doesn’t quite work out like that because I am getting gazumped with much higher tax than Mrs TFS, again see #2 below)
2. I am on about that figure you mentioned once you include yearly bonus. Mrs TFS has a much lower salary but we split everything down the middle, we come as a package! 🙂
3. In my mind I’ve pretty much already done that whole stripping things down and adding bits back in thing. I don’t think it’s unreasonable to want a couple of cheap getaways per year and a bit of golf. This is where we may differ, I can sense that 🙂 – Those are wants rather than needs, I know this! Compared to others though they are not massive ones, IMO
4. Saying that, I was thinking/hoping that this is a worse case scenario (in fact since writing this post and my next brain dump here: http://thefirestarter.co.uk/should-we-buy-an-air-source-heat-pump-or-new-boiler-plus-the-gdhif we have pretty much decided to leave the boiler replacement alone, so that is already £6500 off the total). It’s a projected budget and I just tried to be realistic rather than saying, I will only spend say £50 a month on going out, which I know I won’t do.
4. 55% gross savings is very impressive, kudos to you! I will come over more often and see how you are doing it.
Cheers for the advice and well wishes, much appreciated.
I guess London is dear! If you knock off the 10k mortgage from the 32k then it’s roughly my long term target, but I would have a much higher proportion of disposable income (what you call the fun stuff) than that, Your boring stuff seems high, despite that fact you pay less than I do for power, and I worked hard to lower mine! Your car costs do not seem to include amortization of depreciation – ie when you buy a car you should start saving for your next one, and capital cost divided by the number of years you keep your cars on average.
RIT’s method is the way to do it if you are desperate. It worked for me, in a slightly modified form. But the transition is rough as hell. I suspect consumer spending is similar to an addiction, and the first six months of that is gut-wrenching. After that you get used to the new normal. cutting out media and ad pollution of your life helps too. Ad-block plus on t’internet and throw your TV out 😉
Booze cruises may be worth it again, now the Euro is on the skids. Must look into that again!
Hi ermine,
Sorry for the delayed reply, somehow missed your comment!
My boring stuff is high?! 🙁
I thought that was the area that was pretty tight. I can’t see much room for trimming (Grocery bill excepted, I think we can beat that but remains to be seen!).
I’m surprised our energy costs are similar or that you may even pay more than us. How well is your house insulated? Are you detached? Floor square footage? Ours is terraced, cavity wall and loft insulation and about 1000 square foot although probably only 2/3rds of that is actually heated right now. Bear in mind we’ve only been in the house for 4 months so that is a bit of a rough estimate as well!
True about the car depreciation costs. I’ll add that in. We’re averaging around 1 car every 3 years at the moment, buying at around £1200 and selling for around £500 so that works out to £233, let’s call it £300 per year then to be on the safe side.
RIT’s method does sound good, but I am nowhere near that desperate… yet. Come back in a years time and we’ll see how things are going though, I might have to call it in to save the day!
Booze cruises – I think they could well be a false economy as it just encourages you to drink more, but it certainly doesn’t lose money that is for sure. And we enjoy them, so I think they’ll continue for the forseeable. I want to look at home brewing as getting into my ales a lot more now I’m getting to be an old man 😉
I will try and behave and be nice. I am fully aware that anything i say should not be a disservice to myself or anybody else.
If you read or indeed have read the joseph rowntree foundation report http://www.jrf.org.uk/publications/minimum-income-standard-britain-what-people-think
you may get some ideas of what a minimum budget could look like and then challenge yourself in the ways RIT has suggested. a 55% savings rate is powerful http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
If you have ever played with this
http://www.ifs.org.uk/wheredoyoufitin/ I’d guesstimate that you are in the top quartile for household income. That means you are minted.
That being said. I wish to get across that you are in a very privileged position, you have great power and potential.
I will say no more, as I want more than anything you to read this and feel great gratitude and joy of how lucky you are to be alive, with your resources in todays world and not any negative emotion in anyway.
Kind regards
Vile rodent
At the time of publication (in 2008) I was on less than £8000, whereas the document reckoned you needed about £8200. I also lived in a HCoL area, but you know what? I never felt poor, or that I was missing out or anything like that. You enjoy your life in free ways and spend your time AND money carefully, and you can live, not just survive on a low income.
Hello my good friend rodent 🙂
1. You can say what you want on here, your previous comments were well within boundaries of what I’d accept as a comment so don’t worry about censoring yourself in any way to avoid offence, you seem like a decent chap/chapess.
2. Thanks for the link. Personally I think that highlights that if we stick to the new yearly budget we are doing pretty well. It says £8200 per single adult not including housing, well we would be running at £10,788 (not including the one off big housing upgrades, I am already considering not getting a boiler/ASHP, see latest post here for more details: http://thefirestarter.co.uk/should-we-buy-an-air-source-heat-pump-or-new-boiler-plus-the-gdhif/).
It is obviously very noble living on what is considered the bare minimum socially acceptable level of money, but as you have pointed out later on in your comments, we have above average income and so don’t have to, so a couple of extra K per year for a few creature comforts is not that bad IMO. Yes… I realise if we continue this it will need another £64,712 (each) in investments to cover that extra spend, compared to that £8200 “benchmark”.
3. I am painfully aware of what the saving percentages mean and have written about it extensively here: http://thefirestarter.co.uk/calculating-savings-rate/ (In fact one of the top comments on that MMM article you linked to is mine, I get a lot of traffic from that! 🙂 )
I’ve just created a new all encompassing budget/income/savings spreadsheet which includes a “Years to FI” row right at the top of each month, which tells me, well obviously the years to FI based on that months savings rate. I am hoping this will provide some pretty good motivation having it staring back at me every month 🙂 – I’ll post a link to this in my next post which will be the first of a monthly income/expenses report, as recommended by most people as a way to keep myself on track.
4. You are correct on that front, 94% according to the link. I guessed we’d be high but didn’t think it would be that high! I’d still argue that if you factored in cost of living the chart would be “squashed in” somewhat, but yea fair point well made. I count my lucky stars every day that I’ve hit the birth jackpot, born in a decent country, my parents are brilliant and have helped me out over the years so much, I seem to have a decent head on my shoulders, and I am generally quite fit and healthy. I hope you are and you do too (the fact that you are on the internet reading and replying to my posts suggests you probably are).
I’d like to get more thoughts on your “power and potential” comment. What do you see the potential here, barring any thoughts on simply achieving FI? Ultimately I’d like to free up my time to help make the world a better place, but haven’t really thought about exactly how I might do that yet.
And less of the vile please, as I said before you are only giving your opinions and it’s all valid in my book, as long as I am allowed to reply and say where I disagree then we’re all good as far as I am concerned.
Cheers!
Hi TFS,
We are at a very different stage in life. Mortgage paid off, husband in semi-retirement, (he’ll be going completely in a few months) and saving/investing hard so that I can join him in a couple of years. Identifying the final number that you need to maintain your “comfort-zone” lifestyle (however that is made up), is key to planning for FI and you have already got there, many years before we did. (Although I do have it now – £28,500 after tax.)
All the best for making your new budget work.
Hi Cerridwen,
Thanks for the comment! Sounds like we are in the same ball park then if you take off our Mortgage, but I’d still like to see if we can get it down a bit further if we can – as the months and years pass and our frugality muscles start to beef up a bit 🙂
Hi TFS,
I found your site late last year thanks to Monevator, and I want to thank you for the London datapoints. I think it’s quite brave, and immensely useful to others including myself.
As a household who lives in London, and ‘thinks’ he lives a relatively non-extravagant IT professional living. I struggle to benchmark my spending to anything or anyone, as most people I know spend a lot more then I do. I know it is a lot higher than most in the UK, but… it’s London.
Thought I would return the favour as I have been tracking my spending for 4 years now, though worth mentioning I am not saving for any early retirement (yet) and mercifully I have no debt.
Should add, my girlfriend is on (almost) minimum wage and does not really save, so add about 10k to the below if you want better comparables- I only track my spending:
01/01/2014 – 31/12/2014
Expenses
Dining
Delivery/Take Out £202
Other Dining £1,103
Work £1,378
Entertainment
Music/Movies £372
Going Out £970
Vacation £2,465
Family £4,319 *Family lending/gifting/obligations
Groceries £2,716
Other Expenses
Amazon £370
Bank Service Charge £51
Bedding/Furniture £244
Books/Gifts £73
Clothes £550
Computer £469
Electronics £37
Misc Expenses £80
Online Services £378 *Largely online donations
Phone £147
Subscriptions £392
Petty Cash £1,084 *Mostly delivery or booze
Rent £6,600
Transportation £2,098
UK Government £964 *Immigration/Work Visa costs
Total Expenses £27,063
Hi Lostpupp,
No problem and glad you found it useful. Thanks for returning the favour, also very useful for me and others!
Not that I can talk but just some notes as a comparison really, I reckon you could trim some fat from the Groceries budget? Seems like quite a lot for one person. I won’t ask about the Family obligations.
In terms of comparing yourself to me personally bloke-to-bloke, I am not spending any money on Music/Movies, Clothes, or work (barring transport) so I’d be saving money on those, but my elective spend is just going into different areas instead so no massive difference overall I think.
The phone seems very cheap (presuming it’s a mobile)… care to indulge us with your strategy on that one?
Bottom line is I think we both could cut some fat off our budgets, so let me know how you get on if you decide to have a pop at it!
Cheers again!
Sorry for not following up – to answer your queries rather belatedly!:
– My household, is my girlfriend (now fiancée) and I.
– Groceries, I buy about 90% of groceries for us, so figure is basically for 2.
– Phone, had 12month sim only deal with Vodafone, lowest tariff (250mb) +10% discount from employer. Recently increased to £14.40/month (500mb) as new phones just eat up data.
– Finally, family obligations sounds too ominous, in hindsight should of renamed, though not sure to what. These includes a ‘loan’ for a flight for a cousin flying back home from a medical school in another country (which she got a scholarship for), ‘lending’ some USD to an aunt, because ‘I could get a better exchange rate’. ‘Donating’ to help towards a family member’s wedding. ‘Helping’ with car insurance for another family member. And other ‘loans’ I never expect to collect. Really, these are gifts, but I categorized differently as I wanted to track separately once they became non-negligible. As a side note, my family has provided me with a lot before my career got going, so I am happy to accept these expenses, and if anything am quite proud I am now at a point in my life where I can help back… just like to track these things…
Hi again Lostpupp.
No worries on the late reply, thanks for getting back to me at all.
Groceries for 2 then that seems perfectly reasonable to me (although I’m sure some of our readers would still baulk at that…!)
Aha. 500Mb still seems low to me, I think I easily get through 2GB per month but work pays for mine so I’m not exactly watching the clock on it 🙂
That’s very kind of you to help out various family members like that financially, top man! As long as you knew that they were basically gifts up front and never expected to collect then that’s cool 🙂 – nothing worse than someone telling you they’ll pay you back and then not receiving it (if you actually expected/needed it)! I agree that it is nice to give something back. I’m still at a stage where my parents don’t want, need or will accept financial gifts so I will just offer to help out as much as I can on doing jobs around the house, although my Dad is still fit enough to do most of that anyway sometimes it’s nice to have an extra pair of hands.
Thanks again and keep up the good work my friend!