Wednesday, 28 July 2010

Playing with Percentages

I'm a complete idiot for playing around with spread sheets and numbers.  I acquired this addiction in my former occupation and I'm not likely to shake it.  I'm also a frugal fanatic (about some things) and always on the look out for motivational challenges as well as smarter spending information.  So, when I ran across this post at Budgeting in the Fun Stuff, I saved it for play time.  Ages ago, I found some advice about suggested percentages for budgeting, from some American source, no idea where now.  At the time I was trying to figure out how much to spend on clothes (I don't think I ever managed to spend as much as 6% when I was working; much as I love clothes and shoes, I felt guilty when I spent very much on them).  

Strictly speaking, percentages are very misleading, but they can be useful for comparisons such as this.  The comparison is a rough one as well, as this lady's budget categories are different to the ones in the advice list; I may or may not have fitted those in correctly.  Also, this is just for how my money - with Bill's contribution to living expenses - is spent, where her budget is for both partners and for a total amount of nearly 5 times my income.  My 'family necessities' (? cleaning supplies and toilet paper?) are less than 1%, but not zero (we do still buy TP ;-).   My only 0% was for installment debt.  They are paying off their car this year, so that figure is exaggerated.  Oh yeah, and they live in the US, while I'm in England.  I was interested not just in comparing my percentages with hers, but to see how we're doing for the first 6 months of this year compared with last year.

Category 2009 2010 BiFS
Housing  (30-40%) 12 8 22
Utilities  (4-7%) 12 11 3
Food (15-30%) 9 6 8
Family necessities (2-4%) 0 0 3
Medical (2-8%) 1 1 2
Clothing (3-10%) 1 1 4
Transportation (6%) 5 6 10
Entertainment / Fun (2-6%) 13 10 9
Retirement/Investment (5-9%) 24 30 20
Outlays for Fixed Assets(2-8%) 2 16 4
Mad Money (1-4%) 21 11 5
Total Installment Debt (< 20%) 0 0 12
Total 100 100 100

So, what did I learn from this, if anything?  We pay a lot for utilities, not just in percentages, but in real terms, though I can't see a way at this point to reduce that expense.   Since the house is paid off, our housing expenses are limited to property tax and insurance, but I put repairs and renovations into 'Outlay for Fixed Assets' as I had no idea what else that might refer to.  I suspect the advice amount for retirement is out of date.  Some of my figures for 2010 will 'smooth out' over the rest of the year; neither of us can face any more re-decorating in the immediate future.

I wouldn't say we were necessarily having more fun, only that it represents a higher percentage of my income spent for travel, but I'm definitely 'madder' than she is, in that a lot of those totals in my columns is 'miscellaneous' which means either very small (postage stamps) items or that I've no idea where that money went...  Definite room for improvement there.

Hers is a planned buget, mind.  Mine is just what happens.  I've only ever budgeted, as in making a list of categories and assigning an amount each month, when I thought I was in danger of not having enough to meet my responsibilities.  Any other time, which is pretty much ever since I began following the principles in the Tightwad Gazette, I've just squeezed the things that matter least as hard as I could in order to make more funds available for what is more important.

How do you do your budgeting?

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