For the last seven years I've been putting together reports on our spending over the Australian financial year, which runs from 1 July to 30 June. This makes it easy to do a break down of gross income including taxes that's comparable to many spending reports you'll see online, though all our numbers are in Australian Dollars. At the top level, we can break down total income (as reported in our tax returns plus employer superannuation contributions) into the following expenditure categories:
The gross income for this year (bottom line), and so also "Other Saving", is just an estimate. It is based on the gross income we expect to report in our tax returns (before investment expenses etc.) plus employer superannuation contributions. Tax includes local property tax as well as income tax and tax on superannuation contributions. Investing costs include margin interest. Mortgage interest is included in spending here (though usually I consider them to be an investment cost), while mortgage principal payments are considered as saving. Spending also includes the insurance premia paid through our superannuation. Other saving is then what is left over. This is much bigger than our saving out of salaries because gross income includes investment returns reported in our tax returns. Spending increased by 4% this year in line with inflation. Gross income, especially in real terms, has been slowly declining since the peak in 2020-21. This is partly because I moved high-tax investments into superannuation. Expected other saving is the lowest it has been. The latter includes the AUD 20k concessional contribution we made for Moominmama to our SMSF in each of the last three years. Graphically, it looks like this:
We break down spending into quite detailed categories. Some of these are then aggregated up into broader categories:
Our biggest spending category, if we don't count tax, continues to be childcare and education, which declined slightly this year as the youngest moved out of daycare and the older one changed schools. Both are now in the same private school since the beginning of this calendar year. As mentioned above, the income, tax, and other savings numbers for this year are all estimates. Commentary on each category follows:
Employer superannuation contributions: These include employer contributions (we don't do any salary sacrifice contributions) but not the concessional contributions we paid into the SMSF.
Superannuation contributions tax: The 15% tax on concessional superannuation contributions. This includes tax on our concessional contributions to the SMSF. It does not include taxes on SMSF earnings as the superannuation earnings are not included in income here.
Franking credits: Income reported on our tax returns includes franking credits (tax paid by companies we invest in). We need to deduct this money which we don't receive as cash but is included in gross income in order to get the numbers to add up.* Foreign tax paid is the same story.
Income tax paid is one category that has fallen since 2017-18! Franking credits rose fourfold.
Life and disability insurance: I have been trying to bring this under control and the amount paid has also fallen since 2017-18 as a result.
Health: Includes health insurance and direct spending. Spending peaked with the birth of our second child.
Housing: Includes mortgage interest, maintenance, and body corporate fees (condo association). Rising interest rates have pushed up spending this year again as has replacement of our central air-conditioner, which will cost more than AUD 11k.
Transport: About half is spending on our car and half is my spending on Uber, e-scooters, buses etc. I tried to spend less on Uber this year. I reduced my transport spending by 22% as a result. Also, the value of our car rose, contributing AUD 1,700.
Utilities: This includes water, gas, electricity, telephone, internet, and online storage etc.
Subscriptions: This is spending on all online services that aren't basic infrastructure. After rising strongly during the pandemic we brought it back under control this year with an 8% reduction.
Supermarkets: Includes convenience stores, liquor stores etc as well as supermarkets. Spending has been stable in nominal terms for the last three years.
Restaurants: This was low in 2017-18 because we spent a lot of cash at restaurants. It was low in 2020-22 because of the pandemic. It then jumped as life got more back to normal and rose 11% as prices are climbing I feel particularly in this area. I just paid more than AUD 7 for a large coffee this morning in Queensland, which is a record for me.
Cash spending: This has collapsed to almost zero. I try not to use cash so that I can track spending. Moominmama also gets some cash out at supermarkets that is included in that category.
Department stores: All other stores selling goods that aren't supermarkets. Has been falling since 2019-20.
Mail order: This continued to decline since the pandemic peak in 2020-21. Down another 15% this year.
Childcare and education: We are now paying for private school for both children plus music classes, swimming classes...
Travel: This includes flights, hotels, car rental etc. It was very high in 2017-18 when we went to Europe and Japan. In 2020-21 it was down to zero due to the pandemic and having a small child. This year it almost reached the nominal level of 2017-18. We paid to rent a house in Bondi Beach in Sydney because my brother and his wife were supposed to visit. That was very expensive. In the end, they couldn't visit because of the war in the Middle East. And now we took a second vacation in Winter in Queensland.
Charity: Continues to fluctuate around my goal of AUD 1k. When I think I am really financially independent and my children are grown up I'd plan to increase it.
Other: This is mostly other services. It includes everything from haircuts to fees for tourist attractions. I don't include the latter in travel because we might also pay to go to a museum or paid play place when we are home.
This year's increased spending was mainly driven by increased housing and travel costs, while most other categories declined despite inflation. Both of housing and travel included one-off costs. I paid the second half of the air-conditioner bill a few days ago in the new financial year, so I expect housing costs will remain similar in 2024-25. Travel is hard to predict, but I expect that spending will remain high as we begin to spend more on airfares again. We were still paying for daycare in the first half of the financial year, so I expect education costs to fall a little in 2024-25.
* Moominmama has negative income tax and gets some of her franking credits paid out as cash. This is accounted for here as a reduction in the net income tax category.
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