It’s a question we ask one another generally speaking. But since Enrichmentality is a blog about enriching your future, I thought I should reflect on our journey over the past 1.5 years. And that means a spending review.
Last month was our first full month back in Australia, and as my last post outlined, tax time. This gave us the opportunity to look over our finances, and consider how well our post-work life has worked out.
My husband and I made the decision to work towards financial freedom at the end of 2012, and spent 2013, 2014, and 2015 focused full-time on this goal.
When, in 2016, I discovered my contract required me to stay on 6 months longer than I’d originally planned, we made the decision to save that extra income, and then spend 6 months overseas.
That 6 months turned into over a year’s travel as we found living overseas – even while enjoying a lot of sightseeing – much more economical than we’d originally estimated.
So, how’s it going?
Last year, 83% of our income was investment income.
We spent 69% of our total income, and 80% of our investment income, meaning we were able to actually save money while we traveled.
- Accommodation, at 43%, was our largest expense, followed by
- Other expenses (food, sightseeing etc.) at 33%, and
- Transport, at 23%
We’ve already bought our plane tickets for our next big adventure – Asia. So we’re looking at our previous spending to see where we might improve on the next leg.
Using AirBnB, and Booking.com, our accommodation expenses, although the largest part of our spending, are pretty low. (If you’re not a member of AirBnB or Booking.com yet, use the above link, and we might both benefit from a discount!)
Likewise, thanks to SkyScanner, and Google Flights, our transport costs are pretty good too. We fly with hand luggage only, and bring our own meals on flights, so there isn’t a lot of discretionary spending to deal with here.
Our ‘other expenses’ category is a catch-all for food, drinks, toiletries, household goods, clothing, sightseeing expenses, local transport and entertainment. There are always ways to improve your spending – finding cheaper or sometimes free alternatives that are often even better than their more expensive varieties – and this looks like the most promising category to tackle in 2018.
How we track our expenses
Each month, we sit down and enter all of our expenses – from collected receipts and bookings – into a custom budgeting program Simon created. This allows us to deal with multiple currencies – we visited over 25 countries last year alone – converting them into AUD.
However, you don’t need anything as fancy as that. Prior to traveling, we did the same in a spreadsheet.
There are a lot of free (and paid) apps you can use to do this somewhat automatically, but having an online solution means you need to be aware of security issues.
Regardless of what you choose, the key (for us at least) is to categorise each expense. Without this, it’s tricky to analyse where you could make improvements. For example, some budgeting apps will tell you where you spent money, e.g. $50 at the grocery store. But without knowing how much of that $50 was spent on meat and vegetables, and how much was spent on soft drink and chips, it’s difficult to tell whether you can make better choices.
Currently, we use the following categories:
- Food (basic groceries e.g. vegetables and meat) 22%
- Beverage 4%
- Snacks (non-essential foods like ice creams and chips) 9%
- Dining (eating out and takeaway) 20%
- Transport (local trains, trams, and buses) 19%
- Communications (SIM cards and internet cafes) 1%
- Entertainment (sightseeing and movies etc) 16%
- Sanitary (toiletries) 1%
- Household (cleaning products, washing etc.) 1%
- Clothes 1%
- Gifts (for hosts, and souvenirs) 4%
To give an example of how categories are useful, let’s consider food.
In 2017, we spent approximately $4,300 on food and drink:
- $1700 on food
- $300 on beverages
- $700 on snacks
- $1600 on dining
Putting that into a graph, we can see that we spent almost as much on dining out as we did on groceries, which is not all that surprising, but is certainly a huge amount more than we would have spent before we were traveling. And almost a quarter of our food bill was for avoidable expenses – beverages and snacks.
So some of our aims for 2018 are to reduce the amount we spend on snacks, and to use our drink bottles and drink more water!
What are your goals for 2018?
Do you use any apps to track your spending? Or do you have your own spreadsheet or program? Let me know in the comments!
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Today’s featured image is of the final receipts I entered after returning from our trip. Phew!