Reviewing ACTUAL Expenses

Instead of binge-watching yet another series on Netflix I decided to review 2020 and 2021 to re-categorise all our expenses. Don’t get me wrong, I loved some of the Netflix shows I watched over the last few months. They allowed me to zonk out and just vegetate for a while as I was really overwhelmed with 2021! Now with 2022 really kicking into gear, I need to get my head out of the sand and decide WHAT and WHY I am driven to keep going with my financially independent path and more importantly WHAT will be ENOUGH. To be honest there were times over the last few months that I just wanted to close the laptop and decide to work until 65 and give up. Whatever accumulates in super and property growth and do like the majority “just see how it goes”. It scared the bejesus out of me so I pulled back to what I know and that is reviewing spreadsheets, categorising things and simulating options. One of my happy places.

This exercise is more for me than anything else as it forces me to work through our expenditure and review under a new thought of looking at each category and working out if that category will be needed in 3 years’ time. You see our youngest will be completing High School in 2024. They most likely will still be living at home however their expenses will be self-funded. Of course groceries, utilities will be under the family budget but I have already noticed with our eldest that clothes, beauty products and social outings are not coming out of my household expenses. This will mean that either we increase our investment percentages, to build more potential passive income OR look at reducing my income… and going to part-time!

The tables are pretty detailed as I want to drill down to expense groups that may or may not be around in a few years. I wish I did this detail years ago to see how expenses have changed throughout our family’s journey. These tables have actuals for January & February 2022 so you can see how we are tracking.

I have kept each category separate. first up is the KIDS expenses 🙂

A budget is telling your money where to go instead of wondering where it went!

Kids expenses – for context we have one child in Year 10, Catholic school, and the eldest has just finished high school. No secondary studies as yet as the last couple of years have been rough for them and we are just glad that they completed Year12. The eldest is working a lot with two part-time jobs so keeping busy AND I am experimenting with helping them navigate their finances. A few points to mention. The school fees were lower in 2020 & 2021 (should have been around $9k for the two of them) due to discounts that we were able to receive since we both had time off work with no pay due to covid. We price-matched our eldest with their car purchase last year. I have kept this line in the table as we will be doing the same for our youngest in 2023 (if they save their half!). Tutoring will be higher this year as we have given the youngest the option to have a tutor to assist in gaining structure on how to study, build research skills for assessments etc. Since the eldest had that opportunity from year 9 onwards, I like to think that we are balanced with giving equally to both kids. I think that sometimes they need different things from us however the fundamentals should be offered to both. Not sure how this will go so we will see how they go with the tutoring process. As both work part-time jobs, clothing and entertainment will continue to reduce as they pay their own way. Basic clothing is still under the family budget.

Kids Expenses

Next up is our Investment property expenses. Interest payments on the loan will start to decrease considerably due to breaking our fixed-rate agreement (hence the $971 bank fee) and reducing our interest rate from 3.89% to 2.64%! The loan is still interest and principle and listed in this table is the interest only. I class the principle part of the payment as ‘Investing’ as we are decreasing our loan and increasing our equity. In my books that is me being forced to invest/save.

Investment Property Expenses

Lastly, are the typical expenses to run a household. I have discussed these in various posts before (2021 budget, 2020 review). I use different bank accounts to manage these ‘buckets’/ categories. This way I assign the same amount each week/month. Most of this is automated so when all the coffers are healthy it literally is a ‘set and forget’ for the payment process. The REVIEW is a different area as I do like to revisit expenses at least yearly to make sure that we have the best deal for our family (previous post relating to this is – Review, Reduce, Remove – check it out if you want some ideas to squeeze expenses ). Over the last 18 months I have ‘micro managed’ these accounts to keep us afloat AND still invest whenever we could.

Yearly Expenses
Monthly Expenses

Weekly Expenses

Investing is the aggressive component of our financials. Our clock is ticking BIG TIME. It kind of reminds me of when I was in my early 30s, newly married and literally could feel the biological clock ticking… had to make a decision if we were just going to dive in and see what happens OR decide not to have kids… Similar feelings… should we make the decision to push hard on investing as much as possible and reap the tax benefits and bulk up our liquid assets for retirement or put our head in the sand and just go with the flow. Soooooo many around me are trusting that “all will be well” and that thinking & worrying about money is with them for life! I just can’t do it! Perhaps I am putting too much emphasis on financial security. We will see. The below table is our overall investing plans. Due to both home loans being P&I we are paying those down too. I would prefer a lot of this to be contributed to Super instead (higher tax savings) but can’t for the moment. Both loans are less than 50% of the value of the property and at 2.19% & 2.64% respectively so would gain more investing in super than paying down the home loans. For now, it’s forced saving which is OK with me. I will be transferring money to our Investment Bonds as you need to add each year or you may not be able to invest the following year. We are at the 6-year mark of the 10 year Bond (I explain our use of these in this post.)

Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are

Investing Plan for 2022

The Incoming forecast, including Jan/Feb actuals, is laid out below. This is the plan. I switched off DRP on our CBA shares for the time being as I will use this to contribute to super OR to top up our Emergency Fund. We will see. The tax refund is what I estimate. Again, this is only the second year where I have been contributing to super from my take-home salary and then registering the contribution in my tax return. Last year I received $6500.

Income breakdown

Okay so now the full picture is below to see how the budget can work in reality. You will notice that we are in the negative (planned expenses/investing is higher than planned income/incoming). This is our challenge this year. Some of the reasons for this is that we did not have a fully loaded Yearly expense bucket/account. I was not able to last year so as a yearly bill comes in, I have to work out how to pay. We had a few in Jan/Feb from our yearly category as well as our Investment property category. It keeps me on my toes! but I would like to think we our stable employment now we can top up our ‘buckets’ and reduce this. I also have $7500 budgeted for travel and some furniture. They might not happen this year!

Actual and Forecast Budget for 2022
summary of all expenses

Also adding a graphical representation as I am playing with graphs at the moment … I am normally an excel tables girl … 🙂

Personal Expenses Graph

That’s it for now. This process really helped in Jan/Feb when I was feeling pretty low and overwhelmed with ‘life’. I zoomed in and just plugged away with our data and created new categories. It kept me focused and helped me get out of my slump. Wait till you see the next post with ‘post-retirement’ expenses and investment simulations for the countdown to retirement … lol

Footnote: below are some lines of data from the bank statements I exported from each bank account to go through this process from scratch (thats why 2020 & 2021 had some ‘who knows’ expenses as I couldn’t remember what they were)

Example of bank statement transactions
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