I have been tracking my spending since about 2011. Knowing where your money goes is a great way to make improvements in your spending and direct saved money in a manner that maximizes your savings and investing potential, so you can become financially independent.
One thing I don’t do is live on a budget. Living within a budget provides limitations on what you allow yourself to buy. I have hit financial independence, so if I want to buy something for myself, I allow for the purchase, but I still don’t allow myself to waste my money on stupid things.
For 2019, I had total expenses of $14,728.03. There are some frivolous things I didn’t bother tracking, like everytime I would go and swim laps at the public pool at $2 a pop, or cash tips when getting my hair cut. I don’t want to be an ass about this stuff and I have better things to do and get super detailed with dozens of catagories like some of the weird blogs out there. Keep the shit simple.
Here is a view of my spending, broken down by the different generic catagories and by month. My catagories are pretty basic: housing, food, car, health, and discretionary. Discretionary is my catch all. It can be money used for dating, travel, going out to eat with friends, things I purchased for myself but don’t really need (i.e. camera equipment, a new TV etc).
For 2019, my overall spending increased 11.18% for the year as compared to 2018. For someone who is an early retiree (currently age 40) that would be a big increase. But I have no concerns, really.
When looking at my expenses, we see that my essential living expenses (housing, food, car, health) have actually overall decreased by -7.10% compared to 2018. It was my discretionary spending that jumped 29.08% from last year. I went on a spending spree for myself, because I felt like it. I didn’t date a whole lot this year. I met one girl who we clicked really well, early on in the year. But she brought up wanting kids and the family life, so I unfortunately had to end it. Only went out on a couple first dates after that. Mostly I spent money on me this year for a change. I bought more camera lenses, a new TV, some tools for the shop, set up solar system for the shop which is totally off grid, and other home projects that I felt like doing.
Here is a pretty chart showing the break down of my spending and the percentage each catagory sucks up.
Discretionary Spending- $8,641.88, 59%
This is my dating, travel, eating out, buying things I don’t absolutely need but are related to hobbies and interest, and unnecessary home projects. For most people, discretionary spending is a much smaller percentage of their spending. For me, I have no mortgage or any debt at all, so my discretionary spending is much larger. I splurged and spent a couple grand on camera lenses, bought a new flat panel TV and hung it on the wall, and other fun stuff.
Home Expenses (taxes, insurance, utilities, internet, cell phone) $3,456.54, 23%
I’ve been mortgage free since about 2011, so this makes up my second biggest category. I’ve always lived in less house than I could ever really afford.
Food- $1184.32, 8%
This is one of the few essential expenses to go up from 2018, by 2%. I really just prefer eating at home and making food versus picking up food at a restaurant. I’m learning to cook new things and experiment. I’ve recently started making pizza at home and it only cost about $5 to make 2 large pizzas. I can control the ingredients and pick up fresh ingredients as well. Eating the same amount of pizza at a restaurant can easily hit $20. So cooking at home is a great way to reduce spending. Have your friends come over and grill steaks versus going out. Chirizzo and Mussels, yep, I can make that for $3 versus $15 eating out. Plus, I’m starting to enjoy cooking.
Car- $1,200.04, 8%
I left work in June and that really was the difference in my car expense from 2018. I’ve been fortunate to not really have repairs either. But when a problem comes up, youtube and searching the internet is your friend for trying to do the repair yourself and save big bucks. I’ve literally done a few repairs for $10-20, and looked at estimates of shops charing $200 for a 10 minute job. I’ll probably look at getting a new car in 3-4 years, as my car is now 17 years old.
Health Cost- $245.25, 2%
Knock on wood, I’m healthy. This year I got back in shape to complete a full ironman. That’s 140.6 miles of swim, bike, run (technically further because of the transition distances). What I did have for expenses were dental cleanings.
So there’s a peak into a millionaires expenses. Wanna know a couple interesting things. Look at the spreadsheet. It shows my monthly dividend income. Basically my dividend income for the year was $29,500. That means I lived off my dividends and had a on extra. I’m planning on saving up some excess dividends in the next 3-4 years to purchase that new car. Also look at the change year over year. My expenses increased by 11%, but my dividend income also increase by 12%.
You will after hear about withdrawal rates and the 4% rule. For fun, I calculated that withdrawal rate for me and it comes out to 1.17%, very conservative.
So, how was your spending for 2019?
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