The moment of truth.
You know, I thought I won't do this this year. For a while I thought I had saved myself from doing this because I decided not to follow my expenses monthly last year. But then I looked into Tink, and got a little carried away.
By authenticating through Tink to the different banks I have an account with, I can aggregate all the transaction data for the whole year! Tink even categorizes it for me. After a while of scripting I got a result: 30,000€ spent on bars in January 2019. I'm sorry what? I'm sorry, Tink, but I'm pretty sure that didn't happen, or I'd remember it.
So Tink's algorithms in categorizing wire transfers weren't exactly spot on. But as I had already begun, I just couldn't leave it there. I had to finalize it.
I also saw that Tink gives visibility to my credit card transactions. Yay! Previously I had had to go through the agonizing process of copy-pasting raw text from PDF:s. No more of that sh*t!
Until I realized Tink only has visibility to the current billing cycle. 🤦 Seriously? WTF is this good for then?
So I went to my banks, downloaded each. credit. card. bill. separately. and got an export for the debit transactions for 2018. And did the work to parse the raw text from the PDFs. Took me 3 hours at least, but it got done! And you better appreciate this! 👿
I'm kidding! 😀 A little.
What does The Wealthy Finn spend money on during a year?
Boom! 💥 There you have it. This is what my life costs per year. My total annual expenses are 26,477€. Now, considering my net income (from salary) was 44,725€, that makes my savings rate 41%!
Okay, so forty three percent is not bad, but I feel like with my income I should be closer to 50%. In order to do that, I would need to cut my expenses by 16 percent. Okay, let's see how it breaks down and where I could perhaps squeeze something out.
🏠 Housing 6,935€ (26%) and Electricity 384€ (1%)
mortgage used to be my largest expense, when I counted my mortgage principal payments as expenses. I've changed that now. My housing category includes now three items: mortgage interest (600€), housing company fees (2,603€) and home ownership opportunity costs (3,732€). Electricity is separated to a small category for granularity and accounts for 384€.
The home ownership opportunity cost is an interesting one. Say I have 100,000€ tied to my home, just sitting there. What could I do with that, if I was renting? I could invest that, get maybe 7% return minus capital gains taxes. That's a cost to me. Doing this way, I feel comfortable counting the mortgage principal payments as savings, but I need to balance this with the lost opportunity costs of owning a home.
At the moment, I'm paying about 500€ mortgage principal per month and my lost opportunity cost is about -318€ per month.
Not really a lot I could save on this topic.
Are you with me still on this? Bottom line: to skimp on this would be to move to a less fancy home. I can't go for that, no. No can do. What else is there?
✈️ Traveling: 5,801€ (22%)
There we go! If I traveled half as much as I do, I'd reach the 50% savings rate. The honest fact though is that I live for traveling. I just love to do it. If I don't have the next trip booked, I get miserable. What's the point of living, if you can't do what you like?
Okay, mayyybe I didn't need to spend 5,800€ every year on traveling. Maybe a smaller sum would suffice. Maybe reduce it by a fourth?
Who am I kidding.
🍜 Restaurants 2,474€ (9%) and Groceries 2,251€ (9%)
Together, having something to eat took 19% of my annual budget. I feel that's fair. That's a total of 4,725€ annually or 13€ per day. That doesn't sound too bad, does it? Especially considering that our lunch costs 10€ at work. The way to save on this would be to bring my own lunch, but the time investment of that? 😬 Geesh, no thank you!
🚗 Car: 2,200€ (8%)
It's interesting how cheap a car really is. Sure, it's a lot of money, but the freedom of being able to travel to places over the weekend without taking the bus has a huge impact on my quality of living. Yet, it's only 8% of my annual budget! And this is now including gas, maintenance and even deprecation!
But not insurance.
Because we have all insurances in one company, the house, traveling and the car are all on one bill. I didn't want to separate that here (because: dull), so. But a car does incur about 780€ insurance fees annually. Apparently I'm paying all of our car insurance? 🤷♂️ Other costs are split.
📝 Insurance: 1,540€ (6%)
That's a small number isn't it? Now hear this: half of that is car. Still sitting firmly on your chair?
The healthcare from my company covers for a lot of stuff. If I get sick suddenly, no problem, I just waltz into the nearest center and I'll be treated. No cost. If something bigger happens, I've paid for my care already through taxes. The Finnish healthcare system is pretty damn amazing.
Yes, taxes are high. That's the cost.
👖 Shopping: 1319€ (5%)
The number for shopping feels small and does represent only 5% of my annual budget, but converted to a monthly figure, 110€, where the hell did that go? I don't feel like I shop random stuff for over a hundred euros every month!
But as you might suspect, there aren't a lot of purchases. There are only four that are above 100€, the rest are a lot smaller. And the items seem to be mainly sports-related (won't skimp) and some tech stuff (a guy needs his toys).
⛷️ Hobbies: 966€ (4%)
Pretty much all of my hobbies are sports-related. The ones I can do on regular days are pretty cheap (gym, running etc). The ones I do abroad are much, much more expensive: golf, scuba diving and downhill skiing in particular. This year was actually pretty slim on hobby expenses. Could be a lot higher. One year we went to the Mexico to scuba dive for a couple of weeks. You can't hit 50% savings rate on years with those trips. No way.
📱 Connectivity 601€ (2%), 💇♂️ Services 444€ (2%) and 🚉 Transport 348€ (1%)
These categories include services that connect me to the internet, transfers items for me (also called mail), banking fees and other random stuff. Transport includes the occasional taxi drive and a lot of bus rides. All in all a mixed bag of random stuff that is difficult to save on.
The rest:
The smaller items include things such as gifts. My wife actually buys all the gifts we give. She's quite talented in that and I'm happy to contribute. But because of the arrangement, the gifts don't show up on my tracking. (Instead, I have things like the car insurance). We have a list of IOUs where we put the largest items (such as all Christmas presents) and either even the balance at some point, or if it starts to tilt too much on one side (usually I'm the one who's slacking), I pay for a few common items to even it out.
One item in the rest -category is ValueSignals, which is an investment service I gladly pay for. It's my main source (the only, really) of stock picks. I'll write a proper review about it one day, but it comes highly recommended.
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The biggest variance in expenses come from traveling. Seems I'm traveling almost every month! Oh my. Well, then again, I love doing it and I don't mind spending on it. And even with such a large share going to traveling I still got a decent share of my salary saved.
Another item that bounces up and down is the red shopping box. Like said, a handful of more expensive items (running shoes, scuba gear etc). I could've put them into hobbies too.. maybe I should've. Next time I will!
Income: 61,775€
So I mostly got paid salary, but my share of passive income is pretty big already, isn't it! If you want to read more about it, head over to the blog posts tagged with Passive Income. This is all post-tax by the way, and the size of the pie post-tax is 61,775€. Even my mom got to this chart, hah! I don't remember exactly why that was, but I'm sure I did something - paid for her that she reimbursed probably. The tax guy remembered me with some tax refunds, which I put as income.
Why is it that income isn't as interesting as expenses? Maybe because they never change much and there's so little variety. I did sell sum stuff for a total of 300€!
Where's the blog income, huh? Exactly! Nowhere!
Your thoughts?
If you look at my budget, what strikes as odd? Anything specific you think I could save on?
If you compare my budget to yours, how does it differ? What are your largest expenses?
