My annual expenses jumped to a crazy 29,814 €!

Lifestyle inflation is a bitch. Last year I reported that my yearly expenses were a measly 26,477€ and I didn't think of updating this post for 2019. I figured it'll be around the same amount.

Imagine my horror when I realized now that actually my expenses have jumped by 10%! And of course my salary didn't, which would mean less money is going into savings and investments.

This of course needs further investigation. Where am I spending more?

Do you track your expenses? You should.

If you want to live a lean life financially, tracking your expenses every now and then is so sobering. Like me, you will absolutely find something of value if you start tracking your expenses.

The way I do it is not very complicated, but it does involve a bit of work. It helps if you pay for most of your things electronically. I think I only used an ATM once during the year.

It should be possible to export your transactions from your bank and categorize them like I've done. The most work I faced was copy-pasting the rows from my credit card bills.

But it's worth it.

My life costs me 29,814 € per year


I'm a pretty casual spender nowadays. I used to be quite strict about it and went to extremes, but since then I've developed a fairly healthy relationship to money.

There's a thin line between a healthy spender and a spendthrift.

What is your recommendation to me once you read below the details?

🏘️ Housing  8,421 € (+1,485 €) and electricity 379 € (-5 €)

What? Housing costs increased by 1,5k€?

Ohh right! We bought the duplex that we're renting. I wonder if I should actually exclude that from these calculations. The rent pays for all the expenses, so it shouldn't count to "my life cost". It adds to expenses and income quite evenly.

One reason I calculate housing so expensive to me is due to lost opportunity cost: we own our home and because of that, the capital isn't working for us much. Compared to renting, it's roughly as expensive at the moment and the more we tie capital to our home, the more expensive lost opportunity cost makes it.

✈️ Traveling 7,406 € (+1,605 €)

Now I remember. We ended up doing three expensive trips (oops). I'm not extremely proud of our traveling as it adds to our CO2 emissions so much. I'm trying to more than make up for that by investing in solar energy through Sun Exchange and Trine. In fact, I managed to offset four years of my travel-rich life CO2 emissions in 2019 by investing, while getting around 7% interest on my investments. But I really should find less consuming ways to live. This isn't sustainable.

Also, we ended up being the organizers for one of those trips to two retirees in the family. There are some costs we paid for that they reimbursed later.

🍜 Restaurants  3,556 € (+1,082 €) and groceries 1,845 € (-406 €)

Here's where things get really ridiculous. A thousand euros more on restaurants. As if the 2,5k€ wasn't ridiculous enough. What has happened here is two things:

  1. We've eaten out more
  2. I've paid with my personal card rather than paying with the household card.

We only have one common credit card for shared expenses and we use that when we both eat at a restaurant. But looks like we stopped doing that last year. The solution: get a parallel credit card for the common account.

But really, I have 178 transactions in "restaurants" compared to 113 the year before. Our grocery bill is also a little smaller than last year, which makes sense.

🚗 Car 2,365€ (+165 €)

Car actually cost about the same, but I ended up paying for some maintenance on my own card. Considering we have everything we need in a comfortable, big, new-ish car, I'm super happy about how little it costs.

👖 Shopping 1,050 (-269 €)

Wow! I saved on shopping new stuff! That's pretty great. Not a huge amount, but still. In fact, the largest item we bought was a new Samsonite suit case for traveling. That's always money well spent.

📝 Insurance 1,489 € (-11 €)

Insurance actually contains a significant amount of car-related costs. Other insurances I pay for are home and travel. I don't need life insurance and it is very likely you do not either.

⛷️ Hobbies 793 € (-143 €)

Hobbies stayed on a similar level. I didn't get to do so much on my travels as I did on the previous year. Mostly this is gym memberships and entrance fees to swimming halls etc.

📱 Connectivity 50 € (-551 €)

I saved a ridiculous amount on connectivity charges. This is due to two things:
  1. Our home internet connection was included in the cable charge
  2. My employer started paying my phone bills

💇‍♂️ Services 492 € (+46 €) and 🚉 Transport 165 € (-183 €)

At this point we're getting into the nitty gritty. One of the most costly services I pay for is a god damn locker at work. I need it for storage: towel, outer layer clothes when it rains.

Transport is what I spend on buses, trains and taxis - not much in a year.

Net income 70,232 € (+8,456 €)

So this is all after taxes are paid.

I mentioned my salary didn't increase 10%. And it didn't. The increase in my income was due to investing, passive income. In fact, already 20% of my income was passive in 2019.

Outside of this, I'm working for my own company (side hustles), which I have excluded from this calculation. There isn't a straight forward way to calculate the net income impact from that, as there are many ways over time I can realize that.

With these inputs, my savings rate is 58% - the most important metric that matters when you are aiming for financial independence.

How about you?

Do you track your expenses? How do they look compared to mine?

If you don't, what's keeping you from doing it?

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