I love seeing how other people budget, getting down to the nitty-gritty of their categories and numbers, but I don’t feel it is fair to gain value out of what others are contributing without contributing something ourselves. As promised, here is the fourth Budget Breakdown for the Enough Time Machine. This represents how much we budget per month, not necessarily how much we spend. This week we are looking at Expenses.
The three categories (bills, insurance, transport) we have investigated so far have all been known expenses. We know what they are, how much they will cost to a fair degree of accuracy, and when they come out of our account (whether monthly, quarterly or annually). This is the first category where we have expenses we know will happen, but we don’t know how much they are likely to cost, nor when they will be needed (our known unknowns…)
Unlike the fixed expense categories which will cycle between full and empty as we save and pay, save and pay, the balance of these categories will fluctuate. To this end, I keep some of the balances open-ended (we continue adding to them regardless of how large the balance grows) and cap some others. Let’s explore so you can see what I mean.
$100; Open-ended. We own our house, and along with home ownership comes upkeep. We have been fairly neglectful over the years, having neither the knowledge nor desire to perform those routine annual maintenance tasks that responsible adults usually do. We’ve finally grown up, but now have 2 decades worth of improvements to make. At the moment we keep this for fairly small expenses, such as light bulbs, batteries, kitchen utensils or small furniture.
$100; Capped at $1,000. I had mowed the lawns for years and years, and while I didn’t hate it, it certainly wasn’t something I was interested in. I would often prioritise anything else over doing the yards. The consequences of this were that often, we were “that” house. As for gardening, if a plant survived on its own, then it is still there, otherwise RIP. We now have very hardy plants! In the past couple of years however, I developed asthma caused by an allergy to grass pollen. I wasn’t allowed to mow the lawn any more, doctor’s orders. We have now found someone to do it for us, and it is wonderful. He can do it in half the time it used to take me, with twice the quality (who knew that pushing a mower could result in such different results?!) I have never enjoyed our back yard so much. It is a haven I can sit outside in, enjoying the sun and scenery. Also, now it isn’t such a scary-to-face jungle, I actually don’t mind keeping the weeds down. This is one expense we could drop if we were fully focused on FI, but for me, it is totally worth it. The cap is for larger garden related expenses, such as if we ever want to get trees removed, or top up the mulch etc.
$150; Open-ended. I am lucky that my GP still bulk bills, but Mr. ETT’s charges. We are also getting older, so have had the need for physiotherapists, and I can see a podiatrist in my future. On top of that, we all know how expensive it is to see a specialist! Hopefully this category can just keep growing and growing. It will cover health insurance excess and co-payments, anything not covered by our health insurance, and depending on how large it grows, over the years it may act like a mini-emergency fund for health.
$50/month; Capped at $200. This is just for essentials like underwear, or repairs/alterations. Mr. ETT and I have very different ideas about what constitutes reasonable prices for clothes, so anything outside of this comes from our individual spending money. This category covers my haircuts as well, but at the moment I can stretch that to $10 every 3 months for my fringe, and a simpler cut once a year, so it isn’t too expensive.
$30; Open-ended. In Australia, we are lucky that the Pharmaceutical Benefits Scheme (PBS) subsidises many medications, which keeps medicine prices fairly reasonable. Not everything is covered, though, and in a world with reprobates such as Martin Shkreli, Heather Bresch, and likely others, essential treatment may suddenly become unaffordable.
$20; Open-ended. I hadn’t been to the dentist for at least a decade (I do look after my teeth very well), but my boss was horrified to hear that, so she encouraged me to finally visit one and get back into the habit of going. This should be the approximate cost for one visit each year. Mr. ETT has expressed interest as well, so this will probably double next year.
$100; Capped at $1,500. We both have glasses, so this is covers annual checkups, repair and replacement. We will need to lift the cap if either of us decides to investigate laser eye surgery.
$300; Open-ended. We have a medium-sized extended family, which just seems to keep on growing, and encompasses some of the “big” celebrations like 1, 16, 18, 21, 40, 50, 60, 70… of course, there is also Christmas for the same group, so it becomes expensive.
$10; Open-ended. I am so ashamed to put this out on the Internet, particularly in light of the sub-category above. It’s terrible that we are putting aside 30 times more for people who have everything they need than for people that don’t have enough. I do make regular donations from my spending money, but this category must change next year. At an absolute minimum we need to match whatever we spend on gifts, or even increase over and above. In the immortal words of Derryn Hinch, “…shame, shame, shame.”
Stuff I Forgot to Budget For
$200; Capped at $200. Another holding sub-category for one-off things that don’t fit anywhere else, like The Entertainment Book, extra donations to charity (phew, there have been some!), software and subscriptions, even envelopes and stamps (I like my local Post Office).
All up, expenses represent 14.8% of our total budget. Watch and see how this graph changes as we investigate other Budget Categories.