2016 was the first full year in a long time where I’ve shared expenses with someone and it has been split evenly. I’ve never done a recap like this before on GMBMFB, but since it was so easy to separate out my numbers, I thought I’d show you exactly how much I spent this past year, as well as what the monthly average was of how much I spent – down to the penny.
I actually did struggle with sharing this much information on my blog, but I want to be open and honest with my spending – to you, but mostly to myself. Plus, anyone could have come up with the numbers below, based on my monthly recaps. It was an eye-opening exercise though, to add up my monthly numbers … it’s also a bit embarrassing to see that I spent over $1,200 on non-athletic clothing and shoes when my budget for the year started out at being $500. :)
Related: 2016 Annual Goals Recap
Note that the lines in orange are expenses that we share 50/50 – and the numbers you see below are my portion of the expenses.
(Rent, Utilities, MSP, Insurance, Cell Phone, Internet)
Our hydro bill will fluctuate but I don’t see much of a drastic change, and we are frugal with the amount of heat we use (which is why I put this bill in with the fixed expenses). I’ll be looking at getting a cheaper internet rate in the next couple of months, but other than that, I don’t see my fixed expenses changing much for 2017.
(Food, Household, Entertainment, Clothing, Travel, Car/Transportation, Personal Care, Fitness, Gifts)
The numbers are a bit skewed for 2016 because I bought a Macbook Pro, which set me back about $3,000, and we did a crazy amount of overnight travel this year (about the equivalent of 2.5 months when you include weekends). Although, I anticipate my travel to cost more in 2017… which is why I want to save in other categories. Ideally I’d like to see my expenses under $30,000 for 2017.
I made my budgets quite generous in 2016, and I didn’t hold back on my spending that much. You can see that for yourself in the Entertainment and Clothing categories. :) I’m hoping to get these back down to a more reasonable monthly average for 2017, especially now that I have almost every piece of cold weather athletic gear I can think of (except a winter coat – waiting on sales!).
It surprised me to see how much I spent on Gifts, as I thought I was fairly frugal in the giving department (plus for the most part, my friends and I don’t really exchange gifts for birthdays or Christmas). But I booked a long weekend getaway for RD’s birthday last year (I plan on doing the same for 2017), and I bought a spa day for my sister and I which was about $500, so it makes sense – I’ll just have to increase my Gift budget for 2017 because I don’t see that changing much.
I’m fairly certain our Groceries and Entertainment budgets will drop considerably. The first 6 months of the year we often went out to restaurants (Entertainment) instead of cooking, or went to the pricey grocery store since it was closer to our house, because we weren’t as organized as we could have been – and that definitely changed during the last half of 2016 when I took over all grocery shopping and cooking duties. :) I’m also going to work harder at buying what’s on sale (and not necessarily just what we like to eat).
My Car/Transportation budget will also decrease for 2017 once I stop driving to work. I’m being transferred to another office location, and will have to start taking the SkyTrain to work. My company will be reimbursing me for the monthly transit pass, so that will cut down on the cost of random transit trips, gas, car insurance, and wear and tear on my vehicle.
I’m fairly pleased with my spending for 2016. Take away the price of my laptop, and I’m at $31,700/year. Trim a few of my other expenses, and I should be in good shape to hit my $30,000/year goal for 2017. Hopefully.
2016 also saw a nice increase to my salary, which in turn saw an increase to my savings rate – which now sits at about 50%. But I’ll talk more about that later this week! :)
Adding up my monthly numbers and looking at my spending on an annual basis really made me more aware of where I can trim my budget and where I should be more generous. I’ll definitely be doing it again at the end of 2017, and I’m excited to see how the numbers compare!
Do you know how much you spent in 2016?
The last handbag I bought was in 2009, and it cost me $275. It was an expensive purchase for sure, but 7 years later, it continues to be my everyday purse. It still looks great, and I will keep using it as long as I can. However, a few days ago I decided that I wanted a new purse. The one I have is pretty big and not super practical anymore now that I don’t carry as much stuff around with me like I used to. Plus it’s pretty casual and not very professional to carry into meetings.
So I went online and started looking at purses. There were a couple that I liked, and after about an hour of reading reviews and looking at pictures, I finally decided on one that was $268. But if I was going to spend that much on a purse, I would qualify for free shipping. So obviously I should look at the sale items, right? Twenty minutes later, I had a cart full of stuff and my credit card in my hand. I could afford this purchase – and I deserved it! Plus, it’s not often this store has a sale, I should buy while I can. Wait. What? I snapped out of it right then, put my card away, and very quickly closed my laptop.
Not only was this purse going to be an impulse purchase, but I also found myself justifying a bigger spend just because there was a sale on. Even though I knew that a sale was not reason to buy things that I didn’t actually need.
No matter how good you think you are at managing your finances, we are all guilty of lying to ourselves from time to time in order to justify indulgent spending. Luckily I caught myself before I spent nearly $500 on stuff I didn’t need! Because while splurging on occasion is healthy, one of the keys to financial independence is to stop making poor spending decisions and unnecessary purchases. I didn’t need a new handbag, and I certainly didn’t need the sale items I had gleefully added to my shopping cart.
Here are four common lies we often tell ourselves in order to justify unnecessary spending:
I work hard, so I deserve it
When I lived in Europe, I traveled a lot. And when traveling, I was often times surrounded by tourists. I’ve overheard countless conversations about money, once-in-a-lifetime opportunities, traveling to escape obligations, and travel debt.
There’s one conversation that has always stuck with me: Nic and I were in Prague waiting in line to take a tram ride up to a viewpoint. We were standing behind two 20-something women who were discussing how they couldn’t really afford the six-week European vacation they were on, but they were happy they did it because they “deserved it after a hard semester.” They each financed their trip with a credit card, and fretted for a few moments about how they planned on paying it back. “We’re young, we need to enjoy ourselves,” one of the women exclaimed. “We only live once!” the other woman agreed.
Luxuries like vacations are definitely something we should indulge in from time to time – but only if we can afford them. If you can’t pay for your trip in cash, you cannot afford to go. I can’t stress that enough. It is so much better to wait and save up for a big trip, or scale back and take a less expensive vacation. The last thing you want to do is stress about your money when you’re supposed to be having fun, coming back home to a huge credit card bill, or having to work hard into your retirement years in order to pay off all of the things you thought you “deserved” along the way.
The savings isn’t worth it
Most of my friends don’t do much comparison shopping. They don’t clip coupons, they don’t ask for better rates, and they don’t bring back receipts for price adjustments because “the savings isn’t worth the hassle.”
I don’t know if I should be repeating this story on my blog, but I remember when RD and I were first dating, he confessed that he sometimes didn’t submit his receipts for contact lenses to his health care provider. It wasn’t very much money, and he just felt like it wasn’t worth his time. So he kept putting it off until he eventually forgot about it. I was shocked. Not just because he wasn’t using his extended health care benefits, but because I claim every little expense I can. My blog is called Give Me Back My Five Bucks, after all. :)
A few years ago, I was chatting with a friend who had about $4,000 in a “savings” account with a big bank that offered 0.05% interest. That’s right. 0.05% interest. On top of the low interest rate (if you can even call it an interest rate!), she was also paying a monthly fee for her chequing account. I asked why she didn’t move her money to a bank with free chequing accounts and a higher interest rate (at that time, PC Financial was offering 4%). She replied by saying, “its not worth the hassle, and I don’t need the extra money.” Even though she was in debt and paying her bank to keep her money for her, she wasn’t willing to trade a few hours of her time in exchange for saving $12/month in account fees, and a higher interest rate on her savings.
Maybe $12/month didn’t seem like a lot to my friend, but it’s a lot to me. Especially when you consider evaluating all of your expenses to make sure you’re getting the best prices on the items and services you pay for. It all adds up, and you could potentially save hundreds of dollars each year.
It’s an investment
Sure, you might need new clothing and shoes when you land your first job out of school; looking professional truly is an investment in your career. However, buying a $500 pair of shoes is not an investment. If you want to buy a pair of $500 shoes, and can afford to do so, then go ahead. But buying them with the idea that you are somehow going to financially benefit from them is a lie. A true investment is something that will make you money over time, not plummet in value the moment you leave the store.
It’s a once-in-a-lifetime opportunity
If I indulged in every “once-in-a-lifetime” opportunity that has come my way, I would be in some serious, serious debt. :) I get it – when something fun and unique comes along, it’s hard to say no – but very few things are truly only once-in-a-lifetime experiences.
In my early twenties, a friend asked me to go backpacking in Asia for the summer. “We’ll never get to do something like this again,” she had said. I remember thinking to myself, why can’t we do this trip later when we are both out of debt? Asia will still be there, and we’d be able to enjoy ourselves more if we didn’t have to put our trip on credit. So even though I wanted to go, I knew I couldn’t. Plus, if I could have somehow come up with the money to fund a trip to Asia, that cash would have been better off put towards my debt. Spending money to increase my debt load (while decreasing my net worth) didn’t make a lot of sense to me.
It can be so easy to fool ourselves into thinking it’s okay to spend on things that we can’t afford. That’s what got me into debt in the first place, and I count myself lucky that I figured that out before I spent myself deeper into the red.
What other lies do we tell ourselves in order to justify spending?
My most recent trip to a coffee shop was when I went to Starbucks on January 13th, and it may have been my last … because if you haven’t heard already, the Starbucks rewards program is changing.
With the current rewards program, you earn one star for each transaction – regardless of how much you spend. Once you reach 12 stars, you earn a free drink or food item of your choice. I’m a plain coffee drinker, so each trip to Starbucks only cost me $2 for a tall coffee. And after 12 trips, I’d typical spend my reward on a more expensive drink – like a latte or frappuccino – or even a breakfast sandwich when I wanted a little treat.
With the new changes, the amount of stars you earn is determined by how much money you spend – so for every $1 spent you’ll be getting 2 stars. And you will need to collect 125 stars to earn a free item. That means it would cost about $62 to earn a free Starbucks reward that previously cost me $24. Not cool.
If you’re consistently spending $5 each time you go to Starbucks, then the changes don’t affect you much (because you were already spending $5 x 12 = $60). And if you were buying $7 sandwiches or anything else with a bigger price tag, then you’ll get your freebie even sooner than before.
I get that Starbucks rewards program will benefit people who spend a lot each time they go. But that’s not me. So now there’s really no incentive to go to there over another coffee shop anymore. And actually, it kind of makes my 2016 goal of not going to coffee shops (for anything other than socializing) a lot easier. So, see ya Starbucks. It was fun while it lasted.