Monday, August 25, 2008

Where my money goes

This weekend I analyzed all of my spending for the previous thirty days.  There were no really big surprises for me, but it was a good snapshot of where our money goes.  This is it:

42% - Real Estate - this includes the house that we live in, an investment property that we own, and homeowners insurance

18% - Savings and Investment

10% - Food - both groceries and eating out

10% - Baby - anything purchased for our six-month-old daughter

5% - Utilities - electricity, gas, phone, internet

5% - Household - things for the house, drug store items, and postage

5% - Clothing

4% - Transportation - gas, bus fare, and parking (remember we have only one car, it's paid off, and I bike to work)

1% - Entertainment

1% - Life Insurance

1% - Gifts

(These don't add up to 100% because I rounded them off)

The bad news is that the above outflows of money account for 110% of our income during those 30 days.  However, overall we do live within our means.  Overspending this month made our checking account balance shrink, but did not require any debt.  Furthermore, there are a few special considerations that explain why we spent so much this month.

1.  We have started to cloth diaper our daughter.  We believe that it is better for her.  In the long run this will save money.  However, the start-up costs, which we paid during the past 30 days, are high.

2.  We live outside the United States, but visited the U.S. during this past month.  Because there is a greater availability of products and they are cheaper in the U.S. than where we live, shopping across several categories - baby, household, clothing - was unusually high.  We also paid for long-term parking at the airport during our trip, so transportation costs were much higher, as well.

3.  Some of our utility bills are paid every two months.  So our utility payments are artificially high.

However, we also do give roughly 10% of our income to charities.  We just didn't happen to make any gifts during the past thirty days.

This experience has reassured me that we are on target.  We are saving and investing a good amount of our income and generally spending less then we earn (which we did even this month because 18% of our money was put into different savings and investment accounts).  There are some places we could and probably should cut back - mostly in food.  As a start, I took my lunch to work today.

1 comment:

Donna Freedman said...

My niece made her own cloth diapers in a most interesting way: She cut out two pieces of flannel and in between them she rags! Really. She bought a bag of ultra-absorbent shop rags and used them as moisture grabbers. The diaper covers she lucked into via Freecycle. Spending so much less on diapers has allowed her to pay down on her debt.
I had a friend whose baby was allergic to every single brand of disposable diaper on the market. She finally wound up using cloth.
I used cloth diapers on my own daughter. For almost a year, when I was really broke, I washed them by hand, on a scrub-board. Not fun.
Congratulations on having your priorities in order and a picture of where your money goes.