Monday, January 11, 2016

Year in Review: 2015 Spending

If there's one thing that people (at least Americans in my experience) struggle to talk about, it's money.  We all know that religion and politics are taboo subjects to be avoided, but money seems to be silently lumped in there as well.  I, too, am guilty of this myself. But it's kind of a shame that we are so quiet about money and spending and retirement because they are important topics.

Back in 2012, I did an (almost) monthly post series about money in an effort to try to be more open about talking about the topic, but since then I haven't really talked about money ion a straight-forward way. Then last year my friend Kyria shared her 2014 spending breakdown. I thought it was fascinating to read as each person spends money differently and it's helpful to see how your spending breakdown differs from others.  So in 2015 I utilized mint.com to carefully track my spending so that I could provide a breakdown as well.




A few notes on my spending for 2015:

- Home - this was obviously the area where the majority of my spending went. If you took the amount I put into savings into consideration as a "spending" category, my housing expenses (rent, bi-weekly house cleaning, moving expenses, etc) would be a far smaller piece of the pie. Another thing to consider is that because I live downtown, my rent is higher. But, on the other hand, because I live downtown, I drive very little which is why auto and transportation accounted for a mere 3% of my spending.

- Donations - as I've gotten older and more financially secure, one thing I've really tried to focus on is increasing my charitable contributions. I feel fortunate to work in a well-compensated industry so I feel it is my duty to give back. The majority of my charitable donations go to my church, but I also give to other organizations throughout the year. It makes me a little bit uncomfortable to share how much I donate because I don't want anyone to think that I expect others to do the same or that I am tooting my own horn for donating. However, since it's a big portion of my spending, I didn't feel like I could leave it out.

- Travel - I am actually surprised that the travel category didn't account for a larger percentage of my savings as I went on several vacations last year. However, I did not take any really big trips as most were long weekend trips. I would expect this category to grow in 2016 as I am hoping to take an international vacation in the second half of the year.


- Food and Dining (excludes groceries) - I am proud of the fact that the percentage of money spent on restaurants and coffee shops, which are the main categories in food and dining, is as low it is. This is an area that exemplifies how we all have different priorities when it comes to spending and how it's all about give and take. While I enjoy dining out, I'd rather dine out less and use that money for other things such as my bi-weekly house cleaning service. For someone else, dining out on a regular basis might be a huge priority.

- Other - So what falls under this category? Things like massages, hair cuts, hair products, make-up, theater and concert tickets, taxes, stamps and shipping expenses for mailing packages, etc. No individual category that fell under "other" was large enough to warrant its own call out.

Biggest areas of opportunity:

Of course the whole reason to track my spending in such a detailed manner is so that I can learn from it and improve my spending habits in the years to come.  I have two big areas of opportunity for 2016:

1. Target - Target is my weakness, and it does not help that there is one a block away from where I work. While I save money by buying some non-perishable goods there, I am also guilty of buying things that I really do not need. In 2016 I want to cut back on those unnecessary purchases.

2. Clothing - This is a tough one for me as I need to look professional and polished at work and also have to travel a decent amount to visit clients or my company's head quarters. So investing in my clothing for work is an investment in myself and my career. That said, I want to be more mindful about the clothing purchases I am making in 2016. I do take advantage of great sales at Banana Republic but I have certainly purchased things that I truly don't need.

What about saving?

As I mentioned in my paragraph about my housing expenses, I saved quite a bit in 2015. I considered adding my savings in when creating the pie chart as choosing to save is ultimately choosing to not spend, but saving is such a personal thing, so I did not feel comfortable displaying it. I definitely save quite a bit between my 401(k), IRA, and my savings accounts. I am able to aggressively save because I work in a well-compensated industry. However, the downside to that is that it's also a volatile industry with very little job stability.  Early in my career, my mentor told me that I need to be careful not to fall into the trap of spending what I make because part of the reason our compensation is generous is because we have less stability than other industries.  I have lost count of the number of friends in my industry who have lost jobs over the last two years, but it's approaching the double digits.  My industry is shrinking so the job search timeline can be extended so I feel like I need to save save save so that I have a safety net in case I am ever laid off. I think I still have room for improvement and luckily Phil is the poster child for how to save as he saves more than any person I know!

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So there you have it!  I hope I haven't bored you all to tears with this financial talk but I always enjoy these kind of posts so hopefully you do, too.

Do you use a program such as mint.com to track your spending? What are your biggest areas of opportunity in regards to spending or saving?

18 comments:

Amber @ A Little Pink in the Cornfields said...

I loved this post! I used Mint several years ago, and enjoyed it. I would love to start using it again now that A. We have started a family and B. I am sharing expenses/income with another person (that also happens to be Mr. Frugal - which is one of the things I love most about him). Thanks for sharing!! I always admire your financial philosophies.

Kelly (She Wears a Red Sox Cap) said...

Very interesting! Thanks for being willing to do this. I am definitely someone who doesn't talk about money a lot- but mainly I just don't like talking specific numbers, I think percentages is okay. I should probably do this sometime since I think I spend way more than I should on food ha ha. I did LOL at your Target category. I don't have one convenient and I spend too much there anyway so I avoid it lol.

I do use mint but half the time it tracks things wrong and I rarely go back and fix it. I should try. I also need to hook up Eric's accounts too because otherwise it wouldn't really be that accurate ha ha.

Kyria @ Travel Spot said...

You know I love this post!! It's so interesting to see where your money goes, isn't it? I got a coworker doing this with me as well, and we have noticed a few problems...one is that if I put my savings in, it would change things drastically. But, we have decided that just like you said, saving is not spending. The other one for me this year was my down payment, which similarly is not really "spending", so I left it out. The other one my coworker struggles with (but not me as much) is the "misc" category, which we have decided to take a few things out of to make their own category (such as "gifts and donations"). He also splits a lot of costs with his wife, so his pie is harder to configure than mine.

I am surprised your "home" category is so high, even if you are in the city. Last year mine was about 30%, which is supposedly the "norm". However, this year it is over 50% which is a bit extreme, but it does include some furniture and multiple trips to Target!! I will be interested to see how it turns out this year, which will be a so-called "normal" year, although I suspect there will always be unforeseen expenditures, which will keep that category fairly high.

I bank with BofA and they have a portfolio tool which is similar to Mint. I go in and re-categorize some things though as it is more of a general overlook.

Unknown said...

I laughed when I saw Target was it's own piece of the pie! I appreciate that you share this, I always learn from you when it comes to money management. I think giving back is hugely important, it's not tooting your own horn, there are SO MANY needs!!!

Jeanie said...

I think I can pull a grid down like this from my CU -- I have more categories than you do, though! Gotta figure out how! I know I did well with charity this year but lots of my stuff is on home and cottage-related expenses. Not much travel this year. I have a Shutterfly category, an art category, a book category and class category. Keeps me honest!

missris said...

This kind of thing is super interesting to me! I love talking about money and my friends know to come to me when they want to gab or have questions. I try to be an open book because I think that lots of people, especially women, are doing themselves a disservice by not talking about how much they earn, how much they save, etc. Anyway, you know all this about me :)

Marlys said...

This is a great post! I used Quick books to track our personal expenses but the bank balance is out of whack and I need to ditch it and start over, so I do miss seeing the breakdown. I am going to try and start over this year but best do it before the year wanes away!

Raquelita said...

We also use Mint to keep track of our budget and our spending. It's a pretty great tool! Because we were able to put a sizable down payment down on our home, that category isn't as large as it might otherwise be for us. I definitely spend more than I ultimately really feel like I should on clothing, so last semester I forced myself to not repeat an outfit the whole semester to keep things interesting instead of shopping out of boredom.

suki said...

I use Mint to track our spending in categories, but also have started using YNAB for budgeting purposes. Areas where we can really save on are eating out and alcohol. :P The two combined are about 15% of our spending.

Nora said...

I would have guessed that your travel would have been bigger only because of how often you do it, but scoring deals and being a good planner probably helps :)

Spending opportunities: things for the girls. Seriously. I have a bit of a problem when it comes to picking up cute things for them that are on sale or for Christmas... Target does NOT help!

Saving: I think we have gotten a lot better at this between our 401(k)s, savings accounts and etc., but I know we could do better. D is more of a spender than I am so I have to watch him, too- he likes random fun man things (new tools, workout equipment, etc). We saved a lot last year, and I'm so proud of us for doing so, but would love to save a bit more this year!

Jenny said...

Interesting post, and lots of food for thought. I don't keep track of my expenses, I've tried in the past and give up after a month or so because it's more effort than I'm willing to put in, but I can see that having the annual data would be worth it.

Elizabeth said...

I enjoyed this too and wonderful job with the percentage of donations. I truthfully should get into a real budget tracking practice. This month and next I'm working on being incredibly mindful of food expenses (ie meal planning, limited social/food engagements) and also avoiding the thrift and other stores. I've come to realize that if I didn't meet up with friends for meals to the same degree I'd save quite a bit of money each month. I am proud of the amount that I paid toward debt last year and I am looking forward to the jig I'll dance once I have a few more things paid off this spring. It's within site. The nature of my job can make finances tough as it's never consistent from one term to the next, one course (and thus a huge chunk of income) is always on the chopping block if enough students don't register for it, and there are two times during the year when we have no class so there is no pay check (winter break & the month of Sept). It's made me have to truly think in two term chunks, as in I'm always being cognizant of what my income SHOULD be 4-6 months out and being mindful of costs for 6 months out....

Amber said...

Wow! So so interesting! I do not use mint.com, though I did hear it is available in Canada now so maybe I should look at using it for 2016. I think the majority of my money goes towards things like eating out. Over the holidays I had a bad "one for you, one for me" habit when Christmas shopping because I LOVE having cute holiday decor in the house, but it definitely added up to more than I should have spent / wanted to spend at the end of December so I am now on a bit of a spending freeze. I am really good about saving money but can also be bad about digging into savings too regularly I think. That is one thing I would like to be better about. I have different savings account labels in Tangerine (formerly ING) and I would like to actually use the money in those accounts for what the account is named for, not "oooh I want to buy this and I have money in savings to pay for it." Last year I started saving ALL of my freelance income, and that helped a lot. Since that is extra "bonus" income that can't be counted on I don't include it in our budgeting, but I do manage to bring in an extra $100+ a month on average, so saving all of that extra income definitely helped boost my savings account last year.

I miss Target Canada so much! I also used to spend way too much random money there and it was just down the hill from our house, so maybe it's a good thing it's gone. For my bank account anyways!

Stephany said...

I find it fortunate that the Target closest to me has a really annoying parking lot, and I usually don't feel like fighting traffic to get to it, haha. Same with restaurants! I'm eating at home a lot more since I moved, just because I'm lazy and don't want to leave my apartment - HA.

I don't use Mint because their system doesn't work for me, but I did just buy a budget notebook that my coworker recommended. I'm much better with pen & paper because I think it helps me to be more mindful when I'm actually writing down everything I'm spending.

House would have accounted for most of my spending in 2015, too. Between expenses + moving costs, it was not a cheap year in that department!

Vanessa Meads said...

As terrible as it was when Target failed in Canada, it was something of a blessing for me. I spent way too much money there!

I haven't spent much money at all on clothing over the past couple of years and my wardrobe has really suffered for it. Now that I'm finished my degree and J and I have paid off our credit card debt I finally have wiggle room in my budget to start buying some new (and higher quality) clothes. It's quite the relief to finally be able to invest some money in myself, TBH.

Our transportation spending dropped significantly when we moved downtown a few months ago, which has balanced out our higher rent. All in all the last few months of 2015 saw our financial situation improve in leaps and bounds. I am hoping we can continue that trend in 2016.

I recently switched from using spreadsheets to using Quicken to track my spending and I love it - probably at least in part because I am so used to using QuickBooks in my work. I still use spreadsheets for budgeting and debt management because I just enjoy them so much - haha.

San said...

Thanks so much for sharing this. I think we should all be more transparent with our finances. I don't know what the big deal is ;)

Is your spending report created from your gross or net income (I am always confused when people talk about percentages, because this can be a huge difference when you talk about gross or net).

I definitely have to make a pie chart like that for 2015 and compare :)

Caroline said...

My restaurant and bar budget in the second half of 2015 has been out of control. So that's what I'm focusing on most in 2016. It's hard because going out for apps or a drink has become such a social thing for me lately. I'm really making an effort to strengthen my current relationships and make new friendships, too. I need to figure out a way to do this while staying within budget! I use mint like it's my job, I'm in there every day analyzing haha I love numbers.

Jolene - EverydayFoodie said...

I really like this post!! I've always been interested in finances. Christopher and I don't use anything to track our spending/saving, but we keep saying, "Next year we should totally keep track of how much we spend on groceries." We want to do this mostly just out of curiosity ... I don't think we'd change anything about what we buy for groceries etc..

We live well below our means, in a small house (820 square feet), with no car payments, and no other debt other than our mortgage. Once we pay our bills we still have over half of our income to save/spend. That being said, it would be nice to see where our money is going exactly (how much on food, how much on travel, whatever). We don't shop much at all, so I know most of our money after bills must be spent on food and travel, and then some goes into savings, putting extra money into our pensions, and more on the mortgage to pay it off sooner.