Saturday, January 26, 2019

Spending Breakdown

After a discussion with friends at lunch yesterday and some blogposts I read recently, I decided to try to find out what we are spending on. I haven't done this in more than two decades I think. I looked at the 2017-18 financial year so that I can also easily include official income and tax figures in the total. It's all in Australian Dollars of course:

Income is gross income from our tax returns plus employer superannuation contributions which which don't enter taxable income. Income includes salaries and investment income etc.

Next we deduct taxes. As franking credits – tax credits for corporation tax paid by Australian companies are included in taxable income, they need to be deducted as we don't actually get the cash.  Then there is 15% tax on superannuation (retirement) contributions. In total tax is 26% of gross income. Next I deduct some financial costs that are deducted from gross income to get to taxable income. There are more of these deductions actually, but some I have included in our spending.

Of the AUD 216k of net income half was spent and half saved.

The big spending items are mortgage interest, supermarkets etc, cash spending, mail order, childcare etc, and travel (flights, accomodation etc). Cash spending includes both spending actual cash and spending using our Qantas cash cards. I haven't gone into the accounts for the latter, though maybe I should. Some of the other spending categories very low compared to the actual amount spent on these because a lot of the spending is in cash. Possibly the most important of these is restaurants. Yes, there is a lot of fuzziness in these numbers because we don't budget and spend a lot in cash.

Am happy to get feedback on how we can save money, though I'm not really into "frugality" for it's own sake. Or maybe you would just like to compare the differences with other posted spending breakdowns.

Qantas only provide online statements for the last 13 months. So, I can't now do a breakdown of those accounts for 2017-18. Maybe next year.


Financial Independence said...

Hello mOOm,

Many thanks for sharing your budget. In principle, your budget, confirms what I was telling myself, That we live a good average life, but to reach financial independence I need to earn more while keeping expenses the same. It is a good idea to split the mortgage into interest and principal. Although I do not consider the house as a savings (we always need a roof over our heads).

Home insurance, car insurance, and property taxes are cheap in Ozz (relative to the price of the house)! Are you happy with what you, did the breakdown prompt you to make any specific changes for the next year?

mOOm said...

The insurance on the actual building is included in the fees to the body corporate. Insurance for injuring people with the car is included in the registration - half the price of rego, so car insurance covers damage to property and insures the car itself, which is only worth AUD 4000 or so. Property taxes are low on owner occupiers here because there is a big tax (stamp duty) on buying and selling houses. And the property tax is based on the value of the land and that is particularly low for developments like ours compared to homes that are not under body corporates (condo association). Over time the local government is trying to shift from stamp duty to property tax... So property taxes will go up.

In my opinion, paying off mortgage principle is savings because owning a home means you don't have to pay rent - so that is the return on investment. And you could downsize in theory one day and move to a smaller apartment or cheaper location.

Yes, I am downloading the statements from the Qantas cash card and will try to spend less in cash to get a better idea what we are spending on next year. I already know that next year will have more medical and less travel spending. I'm not really motivated to try to save money at the moment relative to our spending.